What is a cross lease and does it make selling harder?

What sits on the title

Every cross lease has a flats plan on the record of title showing the footprint of the buildings and permanent structures. There is also a lease document, which sets out what each owner may do and usually deals with alterations and the consent of the other owners.

The Real Estate Authority puts the risk plainly: "It is imperative that the external dimensions of each flat are correctly recorded on the title. Any variation between the actual footprint of each flat and what is shown on the title may be an indication that the title is defective."

Where the problem usually comes from

The usual causes are decks, conservatories, garages and extensions added without updating the plan. The work is often years old and was often done by a previous owner. It may even hold a building consent, because whether the council consented the work and whether the flats plan was updated are two separate questions.

On fixing it, the Real Estate Authority says: "Rectifying a defective title can be expensive and requires the property to be resurveyed by a registered surveyor and a new flats plan registered with LINZ." That also needs the other owners on the title to agree, so it is not something one owner can simply order and pay for.

What to do before you market it

Get the record of title, the flats plan and the lease document, and read them against the house as it stands today. Your agent will want the record of title, the flats plan and the lease document before the property is marketed, and anything on the site that does not match the plan is disclosed to buyers under rule 10.7.

Take the title and the lease to your lawyer before the property is listed, not after an offer. This is the point where the lawyer is genuinely needed, because a defect found later by the buyer's lawyer during their due diligence costs you the buyer or costs you in the price. Found early, it is either fixed, priced in, or disclosed and sold as it stands, which buyers accept far more readily than a surprise.

People do sometimes convert a cross lease to fee simple. Whether that is possible or worth doing on your site is a question for your lawyer.