Property Purchases or Property Sales – Cross Lease Titles

Whether you are selling a Cross Lease Title or Purchasing a Cross Lease Title there a few things you need to be aware of which will either make or break the property transfer and transaction.

Cross Lease Titles are a very common form of Land Tenure in New Zealand. They can also be a nightmare for Conveyancing Practitioners clients.

So what exactly is a Cross Lease Title? A Cross Lease Title has two interests being Fee Simple and Leasehold and it is this tenure which forms the relationship between the co-owners.

It is also known as a Composite Title. In simple terms: The owner of a Cross Lease Title holds an undivided share as tenants in common in the fee simple of the whole of the land upon which the flats are erected. Essentially the share will depend upon the number of flats on the property. There is than a Leasehold estate with a Lease generally for 999 years for the flat itself, furthermore a nominal amount of rent @ 10c is contained in the Lease.

The biggest problems we encounter with Cross Lease Titles is when there has been an addition or alteration to a dwelling and this is attached and enclosed and the Flats Plan has not been updated.

This essentially makes the Title a defective Title and it can be requistioned under Clause 5 of the Sales and Purchase Agreement. The cost and process involved in getting a Flats Plan updated is a very extensive process. It is also one of the biggest causes for an Agrement for Sale and Purchase to be cancelled.

I recently had an Agreement for Sale and Purchase which was a Cross Lease Title and I acted for the Vendor. The property was subdivided from a Fee Simple Title to a Cross Lease Title and  there was a Land Covenant registered on the original Head Title and carried forward to the Cross Lease. The Land Covenant clearely stated that there could only be one dwelling sited on the property.

Quite obviously since it was a Cross Lease Title there was more than one dwelling. The Purchasers Conveyancing Practitioner requisitioned the defect in Title and requested the removal of the Land Covenant. As this was going to be a huge exercise to be undertaken by my clients they declined to remove the Land Covenant and the Agreement was cancelled.

My clients are now considering their options before putting the property back on the market as to whether they will undertake the removal of the Land Covenant in order to avoid another Agreement being cancelled.

The Land Covenant should have been removed by the Solicitors who transacted the subdivision from Fee Simple to Cross Lease Title.

So in my opinion you should always obtain a Search of the Certificate of Title and all encumbrances registered on the Title whether you are selling or purchasing. This should be done by all Real Estate Agents and Vendors who wish to sell their property privately.

You can click here http://www.propertyconveyancingservices.com/43.html to request a Certificate of Title Search.

If would like more information about Cross Lease Titles feel free to email me directly kim@propertyconveyancingservices.com

Cheers Kim