Cross Leases were a legal construct which evolved back in the late 1950s. They were devised by lawyers to
avoid the proscriptive subdivision regulations at the time. These regulations included minimum site sizes, and
the payment of reserve contributions to local bodies. At that time a lease of land was not considered to be a
subdivision. Therefore cross leases directly side stepped the payment of reserve contributions.
The Resource Management Act 1991 changed this, now cross-leases are largely brought into line with all other
forms of subdivision. No advantages associated with creating new cross lease titles remain.
A Cross Lease title comprises two separate interests. Firstly is an estate as to the undivided share in the fee
simple of the head title of the land. The various owners are tenants in common in equal shares, except each
owner gets a separate Certificate of Title. Secondly a title is issued for an estate in leasehold in the cross lease
dwelling/flat, usually for a term of 999 years (i.e. a lease of the building only). Both interests are registered on
one title, called a composite title.
Restrictive covenants on the titles designate areas to be set aside for the exclusive use of individual units (e.g.
courtyards, gardens or parking spaces associated with specific flats).
Some Problems Associated with Cross Leases
avoid the proscriptive subdivision regulations at the time. These regulations included minimum site sizes, and
the payment of reserve contributions to local bodies. At that time a lease of land was not considered to be a
subdivision. Therefore cross leases directly side stepped the payment of reserve contributions.
The Resource Management Act 1991 changed this, now cross-leases are largely brought into line with all other
forms of subdivision. No advantages associated with creating new cross lease titles remain.
A Cross Lease title comprises two separate interests. Firstly is an estate as to the undivided share in the fee
simple of the head title of the land. The various owners are tenants in common in equal shares, except each
owner gets a separate Certificate of Title. Secondly a title is issued for an estate in leasehold in the cross lease
dwelling/flat, usually for a term of 999 years (i.e. a lease of the building only). Both interests are registered on
one title, called a composite title.
Restrictive covenants on the titles designate areas to be set aside for the exclusive use of individual units (e.g.
courtyards, gardens or parking spaces associated with specific flats).
Some Problems Associated with Cross Leases
- Alterations & Extensions - Cross leases can work well until one of the owners wishes to do
something, for example build a garage of extend outside the envelope of the flat. In these circumstances
permission of all the other owners must be obtained. - Surveyor to Redraw and Lodge New Flats Plan - Once as the additions/alterations have been
completed the changes must be registered on all of the titles/flats plans. This can be relatively expensive
depending on the number of other owners in the complex. For Example: Say you built a garage on your
area of exclusive use, with permission from the other owners and with a valid building permit from the
Local Authority. You must also amend your own and the other flats plans within the complex to record the
existence and location of the new structure. - Lack of Standardisation - There is no such thing as a standard cross lease and wording from one
lease to another will be different in some way. Some may have onerous covenants which, for example
might ban ‘pets’ from the complex. Each individual lease needs to be read thoroughly to see if it suits
your individual living circumstances. - Repairs to Common Areas - Problems can arise when there are repairs to be done to a common
area, such as a driveway. Unlike the Unit Titles Act where this is the responsibility of the Body Corporate,
with a cross lease there is no legal redress unless there is a specific provision in the lease to deal with
the issue. - Some Earlier Strata Titles Have No State Guarantee - Cross leases are generally only used for
buildings with one or two levels, although some early attempts were made at strata cross-leases (i.e.
defining areas in three dimensions). These latter flats plans did not have to be surveyed which made it a
cheaper and quicker process. However the large downside is that they do not come with a state
guaranteed, indefeasible title. If intend purchasing such a property seek legal advice.
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Innovation + Experience |
| PO BOX 9018, Wellington 6141 | phone: (04) 240-0124 | fax: (04) 232-4414 | email: valuer@ vcnz.co.nz Innovation + Experience |