Read Time: 3-4 minutes
Cross-leases are a mystery to most first-home buyers — and fair enough!
To help make this easier to understand, we like to use a rugby field analogy:
Click here to read more about how this works.
In today’s newsletter, I’ll show you exactly how I figure out—fast—whether a cross-lease issue is a minor hiccup or a full-on title defect that could kill the deal.
Ps please skip to the end if you know the basics of cross-leases.
If you get this wrong:
Most of these issues are fixable, but only if you catch them early and know what kind of agreement you’re working with.
Background / Example
An owner of Flat 1 builds a shed, deck, pergola, etc (structure) on their restricted area (A) under the impression they own all of the freehold/fee simple property shown in purple below. However, they only own a 1/2 of an undivided share of the purple freehold title and lease their flat and restricted area from the other owner of the fee simple. This lease contains certain rules about building any "structures".
Click here for an example of a title that has a deck extension at the rear of the property:
Sample Title Review #2 - Andrew Edge and Bea Dunn - Deck Extension at Rear of Property
When it is time to sell the property, the standard ADLS agreement (non-auction form) allows the purchaser to requisition (make a request) the structure on the title on the following criteria:
(P.S. If it’s an auction agreement, none of this helps—you can’t use clauses 6.4 or 8.7 to requisition the title.)
Here’s the exact process I use—simplified into a 10-second flowchart format that explains how clauses 6.4 and 8.7 actually work.
The goal is not to end up on the red square: There is a defective title.
Likely needs Flats Plan update or removal.
Case Study
We have an example of a property that had a lounge extension that was attached and enclosed.
Click here to review this example: Sample Title Review #3 - Title Review for Rose Young and Cooper John Young - Lounge Extension sits outside Leasehold Interest of Flat
🔑 Bonus Tip: Most leases say consent “must not be unreasonably withheld.”
You can require the seller to obtain this under clause 8.7 (if not an auction).
Click Here: Cross-Lease Flow Chart
Check out this One-Page Cheat Sheet I used to present a Webinar on this exact topic: HouseMe Legal's ADLS Webinar - Cross-Lease Case Studies
