What is a cross-lease in NZ?

On a cross-lease title you own two things: an undivided share of the land, held jointly with the other owners, and a long lease of your particular home, almost always for 999 years at a token rent. The lease is granted by all the owners together, which is where the name comes from. Everyone leases to everyone.

Cross-leases were a popular way to put two or three homes on one section from the 1960s through the 1990s, so they are common in older suburbs across NZ. Lenders treat them as close to freehold for most purposes, which is one reason they remain straightforward to buy and sell when the title is in order.

Each cross-lease title includes a flats plan, a drawing of the building footprints on the section. If the building has changed since the plan was drawn, say a garage was added or a deck enclosed, the title may no longer match reality. Lawyers call this a defective title, and fixing it means a new survey, new leases and the cooperation of every other owner.

When you buy, compare the flats plan to what is physically there. An extension that is not on the plan is a negotiating point at best and a settlement problem at worst.

Day to day, a cross-lease feels like ordinary ownership. The differences show up when you want to change something. Structural alterations and additions generally require the other lessees' written consent, and the lease will set out rules about shared driveways and exclusive use areas. Most neighbours are reasonable. The point is that you are asking, not telling.

Insurance usually sits with each owner individually, unlike a unit title where the body corporate insures the building. Some leases do require owners to insure or to reinstate after damage, so check what yours actually says rather than assuming.

Read the lease itself, not just the title summary, and have your lawyer confirm the flats plan matches the buildings. Ask whether the owners have ever discussed converting to freehold. Conversion is possible, but it involves surveying, legal work and the agreement of every owner.

A check at checkmybuilder.co.nz/property shows the title type for any NZ address, which is a quick way to learn you are looking at a cross-lease before the agent mentions it.