Prior to the commencement of the Resource Management Act, but less common since then, many small lot urban subdivisions were undertaken by way of the creation of crosslease titles. Crosslease titles create a shared ownership of the land in the underlying title and a 999 lease in the buildings shown on the crosslease plan. This form of ownership circumvented the Council requirements to apply for a subdivision consent and was therefore a cheap way to divide land and overcame Council restrictions on minimum lot sizes. For these reasons they were very popular and a number of urban titles still exist under crosslease ownerships.
However crosslease titles have many underlying issues. The lease of the building is defined by the shape of the building that existed when the survey was done and any change to the footprint requires a resurvey and the approval of all other owners of the crosslease title. Crosslease titles also have exclusive use areas (parts of the title intended to be used by the lessee of the dwellings) and common areas (parts of the title intended to be used by the lessees of all of the dwellings). Historically these areas are poorly defined and the characteristics of a crosslease title can also give rise to problems for the owners.
Ours team of Surveyors are often called upon to assist with changes to crosslease lease areas (where the external dimensions of dwellings have been altered) or the conversion of crosslease titles to freehold titles. For more information on these issues give our team a call.
Because of the limitations of crosslease titles, it is becoming popular to convert crosslease titles to freehold titles. There are a number of reasons why this is being done. The most common reason however is that freehold titles are less complex and therefore more attractive to purchasers and are normally are valued higher. A conversion to freehold also removes all the complexities inherent in crosslease titles.
So what is involved? In essence your Surveyor will obtain consent from Council to modify the titles pertaining to the crosslease, undertake the necessary survey, and obtain approval from LINZ. Your solicitor can then request the issue of the new titles.
What are the issues? The main issue is to ensure that appropriate easements are created so that each title has legal access to services (power, telephone, water, etc). Such easements are generally not required on crosslease titles because all the land is jointly owned. Each lot also take into account appropriate outdoor living areas and yard requirements, although given the historic establishment of the dwellings, compliance with these controls if often not considered important. Often it is challenging to locate where existing service connections have been located for each dwelling, and in these situations it more important to ensure easements are created for all services in appropriate locations.
These are issues your Surveyor can discuss and sort out for you, and also advise on likely costs and timeframes. Clients generally find the conversion of crosslease titles to freehold titles a worthwhile and cost effective process.
If you own a crosslease title, or are looking to buy or sell one, call one of our Survey team to discuss any potential issues, or how a conversion to a freehold title creates additional value.