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Online CPD module l Booklet l PowerPoint Presentation
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Experiences in Canterbury have confirmed the Law Commission’s recommendation to phase out cross leases. This practically focussed webinar will examine the procedures for converting cross leases to freehold and unit title in the current legislative environment.
Cross leases are a popular form of subdivision going back to the 1960s where the land and buildings are owned by the owners of the buildings as tenants in common and flats leased. The key problem is that cross lease owners often do not fully understand, or follow the terms of their leases. This leads to alterations being carried out without neighbours consent and failing to incorporate these alterations into flat plans, as well as breaches of other terms. There are often issues when properties are sold with unaware owners trying to obtain their neighbour’s consent retrospectively.
When dealing with these problems there is the opportunity of conversion to freehold or unit titles which can add value to clients’ properties.
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There are over 216,000 cross lease properties in New Zealand, and nearly 50% of which are in Auckland. Cross leases were a clever invention in the 1960s by Brian Mahon, a North Shore practitioner to get around subdivision restrictions. They are created by private contract, rather than governed by specialist legislation, and over time problems arose with them. As a result, law reform was mooted in 1999 by the Law Commission to allow conversion to fee simple titles, as well as to unit titles which was already able to be done. Some 15 years later, although there has been unit titles reform, the cross lease reforms still have not been implemented.
Property lawyers and their cross lease owning clients are well aware of the deficiencies that still need to be addressed, as they deal with un-consented alterations, issues with multiple insurers and disputes regularly. Pending the implementation of a simple statutory fee simple conversion solution as a possibility they need to be aware of what options are open to them when they deal with cross leases.