Cross-lease to Fee-simple
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What you need to know
About changing from cross-lease to fee-simple tenure.
Changing from Cross-lease to fee-simple
So you are thinking about converting your property from a cross-lease to a fee-simple title? Congratulations – this is one of the best things you could do in respect of your property.
A cross-lease title simply isn’t as good a title as a fee-simple title, because your neighbour is a co-owner of your land, and you need your neighbour’s permission for things that a fee-simple owner wouldn’t. For example, any alterations to the property – even something as simple as changing a window to a French-door – could require your neighbour’s consent. If your neighbour refuses consent, and you go ahead, you may be required to take your alterations down (worst case scenario).
Cross-lease properties are often the subject of neighbour disputes, and the legal process involved in resolving any dispute is not easy and can be very expensive. There is historically a value discount applied to cross-lease properties (we have the evidence to prove it!) – a fee-simple property is frequently worth more, and is easier to sell. But there is also a greater benefit than just money: the ability to make your home the way you want it, without needing your neighbour’s consent, and without the ongoing costs of needing to update the Flats Plan on your title after each alteration.
What is involved
To convert from cross-lease to fee-simple?
The process is complex, generally far too complex for people to manage themselves. It involves a full subdivision consent application which needs to be approved by the council, and a full legal subdivision of the property, including a full survey of the property including the placement of pegs etc. that needs to be approved by LINZ. All properties on the cross-lease must be accounted for in the subdivision and all the owners are required to sign the final documents.
Cross-lease to fee-simple process
This process has been created to show you the steps involved in converting from cross-lease to fee-simple. It should be used as a guide only.
This process takes between 6-8 months to complete.
Frequently asked questions
What are the difficulties with Cross-lease properties?
There are important considerations for owning a Cross-lease property, as the joint ownership of the underlying land creates limitations and increases the checks that you will need to do before purchasing. Selling a cross lease property also requires extra care, as it can really complicate the sales process if there are problems with the Cross-lease flats plan.
- You are required to get permission from your other title owners if you want to add any additions to your home – this can often cause problems because they can say no.
- When you buy or sell your property, the relevant flat plan needs to match exactly what the buildings are on the property. If they do not, this is what is referred to as a defective title. As well as your solicitor, not likely to approve the title for purchase, you also may not get a mortgage approved until it is corrected or updated. This can take between 12-18 weeks, which can delay the sale of your home.
- Because of the proximity of some cross-lease neighbours, and because of personality differences, tensions can arise that would not normally be a problem on non - cross lease properties where getting on with your neighbour doesn’t impact on your legal position.
- The garden area on a cross-lease property may be shown as “common ground” on a Flat Plan, meaning this area could be used for a party by other owners in the complex.
What are some of the advantages of Fee-simple titles?
- If and when you decide to sell, having a Fee-simple title makes it easier to sell the property and increases its marketability and sale value;
- You have much greater flexibility in what you can do with your property, in particular additions and alterations to the property;
- It makes it more likely for you to avoid any neighbour disputes.
Can I convert to a Fee-simple Title (aka Good Title)
Yes, and this is what we specialise in at GOOD+TITLE. This is typically called a ‘change of tenure’ subdivision. It is important to know that this does involve a full subdivision consent application which needs to be approved by council, and a full survey of the property including the placement of pegs etc. that needs to be approved by LINZ. All properties on the Cross-lease must be accounted for in the subdivision and all the owners are required to sign the final documents.