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Cross-lease properties are particularly popular in first home buyer areas around Auckland, such as Te Atatu Point, Beach Haven, Northcote, Avondale, and Waterview. To the naked eye, these properties often resemble standard homes—perhaps the only clue being a shared driveway. However, the reality of cross-lease ownership is quite different from freehold/fee simple, and not fully understanding the implications can cause significant legal issues down the line.
In this newsletter, I’ll explain the high-level concepts of cross-lease titles, using a rugby field analogy to make things clearer, and highlight the common risks you should be aware of before buying. This newsletter will not cover resolving any cross-lease issues, wording in cross-leases, technical legal concepts or airbtration/disputes.
Purchasing a cross-lease property without thoroughly reviewing the title can leave you with unexpected legal problems, especially if you skip legal advice or don’t conduct due diligence. If your property has unresolved cross-lease issues—such as unconsented alterations—you’ll need approval not just from your cross-lease neighbour, but from both your bank and insurer.
Crucially, banks and insurers will want to sign off on any cross-lease issues before you purchase the property, not afterward when problems arise. If you discover an issue after buying, the bank may refuse to fund your purchase, and your insurance may not cover certain risks. This is particularly important if you're buying at auction, where you won’t have the opportunity to fix or withdraw from the sale after you have signed the agreement.
Many first home buyers overlook the unique nature of cross-lease ownership, assuming that it’s much like owning a standard freehold property. In traditional ownership, “my land, my title” is straightforward. However, with a cross-lease, you and your neighbour own an undivided share of the land, and each of you leases a defined portion (your flat) to one another.
Video Explanation: Understanding Cross-Lease Titles with a Rugby Field Analogy
I explain cross-lease titles to first home buyers using a rugby field analogy.
Imagine the property is split into two halves. You lease your half of the field (which has your "flat" i.e. house on it) to the exclusion of your neighbour, and they lease theirs.
The common area, is typically a shared driveway or other shared space that both parties can use - a bit like the sideline where the bench players sit. The rest of the field represents your exclusive use area, which only you lease and control.
Where it becomes tricky is when there are structural alterations to your flat that aren’t reflected in the flats plan. This legal document, attached to the title, outlines the property layout. If alterations, such as an extension are attached and enclosed to the flat, you need to:
Update the flats plan with LINZ — this is a time-consuming and costly process.
Obtain consent from your cross-lease neighbour—consent cannot be unreasonably withheld, but it is a legal requirement.
The purpose of this flow chart is to explore if there are any issues with a cross-lease title and how they can be fixed. The options to fix the issues are summarised in clauses 6.4 and 8.7 of the ADLS Agreement. The most common cross-lease issue involves a cross-lease owner building a new structure on the flats plan that requires the written consent of the cross-lease neighbour.
Smaller, non-enclosed changes (like a deck or shed) don’t require updating the flats plan, but you will still need written consent from your neighbour.
Importantly, your lawyer can help negotiate solutions before you go unconditional. They can assist with securing bank and insurer sign-off, and use clauses such as 6.4 or 8.7 of the ADLS Agreement for Sale and Purchase agreement to resolve title issues.
If necessary, your lawyer can also help cancel the contract if the issues cannot be resolved, ensuring you can get out of the agreement if the risks are too high.
