Cross Lease Subdivision (Flat Plans)
A Cross Lease (sometimes known as a Flats Plan) is a common type of subdivision in residential areas. Originally a cross lease was a means of circumventing a councils planning rules in order to subdivide a property into sections smaller than were originally allowed.
A cross lease creates a title where there are several owners of the land related to one title. These owners have equal shares in the land and all the improvements on the land (for example the houses, sheds, fences and drive). Each shareholder of the land will lease their house and any other associated building/s, and a portion of the land. Some of the land is held as common land (used by all), most commonly used as a driveway). A cross lease usually has a lease timeframe of 999 years. Each building and leased area is identified on a cross lease survey plan (also known as a Flats Plan).
A combined freehold and leasehold title is issued to each shareholder. This title has the following information:
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the freehold share of the lessee in the whole block, and
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the leasehold interest of the lessee in the individual site.
How a cross lease works:
1. The total area of land is owned in equal shares by all of those owners of the cross lease.
2. The individual owners then lease a particular building or buildings that are shown on a Flats Plan. This lease is for 999 years.
3. The share of land that the building/s sit on is then registered in a cross-lease agreement on the Certificate of Title.
4. If you wish to make changes to the cross lease agreement, you must get approval from all the other cross-lease owners and any changes to the shape or numbers of the buildings must be recorded and shown on a new plan. Each time there is a change, a resource consent is required from the local council.
This is still a common form of property ownership, and banks have no difficulty in registering a mortgage over such a property.
A cross lease works most efficiently when there are only 2 - 4 houses involved, anything larger is best dealt with as a unit title.
Some Disadvantages of a Cross-Lease
There are some disadvantages associated with cross-leases that all home owners and potential home owners should be aware off. If people are aware of the issues then these disadvantages should not be of major concern.
- Making a Decision - usually a unanimous decision is required otherwise an action cannot be taken. This is why cross-leases should be kept to a maximum of hour houses, otherwise the decision making becomes harder to make.
- Alterations - every homeowner of a cross-lease title should be aware that any removal or alterations to the house footprint or any building, including additions, a new cross-lease plan is required to be done. A new cross-lease usually requires resource consent for a subdivision (any alteration to the cross-lease plan is classified as a subdivision). The new cross-lease plan obviously involves additional costs for the surveying (surveyor), council (planning costs) and legal costs.
How to convert from a Cross-Lease to a Freehold Title
A freehold title gives a homeowner exclusive rights over their property to make a decision and so negates the need in a cross-lease to consult with the other owners. Freehold titles are the normal form of title registration in New Zealand.
In order to convert your cross-lease into a freehold title, all shareholders of the title will need to agree. Then resource consent is required where you need to try to have the proposed freehold boundaries comply with the District Plan. This is not always possible and so a dispensation will be necessary from the council as part of a resource consent process. Then the surveying can be done, with the final sign off from the Council, Land Information New Zealand approval, and finally the lawyer creates the titles.
Alternative topics Back to Definitions home page or FAQ or Unit Title or Types of Subdivisions
