A Guide to Buying and Selling Cross Lease Properties

As with any property purchase, it is important to conduct thorough due diligence and research. But, when you’re buying or selling cross lease properties, you need to double-check everything and better to seek assistance from a property lawyer. Properties with shared areas can differ significantly from those without, and navigating the buying and selling processes can be challenging. 

This guide offers expert insights into the key considerations and practical steps to help both buyers and sellers make informed decisions.

Buying Cross Lease Properties – Key Considerations for Buyers

Cross lease properties are often more affordable than freehold properties, thanks to the shared ownership structure. These properties are especially appealing to first-home buyers or those on tighter budgets. Another advantage is that shared maintenance responsibilities can lower individual costs. Plus, many cross lease properties are located in established, amenity-rich neighbourhoods, offering great convenience and access to services.

That said, cross lease ownership does come with its own set of challenges. Shared land ownership means you can’t make changes to your property without first getting the approval of your co-owners, which can be frustrating if you’re planning renovations. 

Since each cross lease property comes with its own specific restrictions, it’s crucial to have a property lawyer carefully review the title and lease agreement before you make an unconditional offer. 

When buying a cross lease property, keep these key points in mind.

• Check Lease Documents: Ensure the lease agreement and flat plan are up-to-date and reflect the property’s current layout. Inaccurate documents can cause problems down the line. A licensed land surveyor can help you in this matter and confirm that the property matches the flat plan or not.
• Understand Shared Areas: Clarify which parts of the property are shared, like driveways or gardens, and how maintenance is divided. For example, in some flats, backyards are designated as exclusive use areas; however, a narrow shared path running through them may be considered as common property. This allows residents from the back units to cross through the front unit yards to access bins or other shared facilities.
• Look at Dispute Resolution: Check if the lease explains how co-owner disputes are handled. This can help avoid costly legal issues.
• Know Alteration Rules: Any renovations will need consent from co-owners and possibly the council. Understand this process before planning changes.
• Talk to Co-Owners: Get to know the other leaseholders and their attitudes. A good relationship can make shared ownership much easier.

With the right research and preparation, cross lease properties can be a cost-effective way to kickstart your property investment journey. These properties have the potential to increase in value by 6-16%, often simply by converting the title. For example, in Auckland, a title conversion for two units to freehold typically costs around $40k ($20k per title), which can result in a value gain of approximately $150k.

Selling Cross Lease Properties – Key Considerations for Sellers

There’s a lot of stigma around cross-lease properties, and some people avoid buying them. This can impact the price and the level of buying interest when it’s time to sell. To ensure a smooth selling process and get the best possible value, it’s important to understand the key factors before listing your property.

• Ensure Lease Documents and Flat Plan Are Up-to-Date: Prospective buyers will scrutinise the lease agreement and flat plan to ensure they reflect the property’s current state. Any discrepancies, such as unapproved alterations or outdated plans, can delay the sale or reduce buyer confidence. Engage a surveyor to confirm the accuracy of these documents.
• Resolve Consent Issues: If you’ve made any changes to the property, such as extensions or structural modifications, ensure these have been approved by all co-owners and comply with council regulations. 
• Highlight Shared Area Arrangements: Clearly communicate the responsibilities for shared areas, such as driveways or gardens, to prospective buyers. Transparency about maintenance responsibilities can alleviate concerns.
• Disclose Potential Challenges: Provide full disclosure about any known disputes or limitations associated with the cross lease structure. Transparency builds trust and reduces the likelihood of issues arising during the sale.
• Seek Professional Advice: Work with a property lawyer, real estate agent, and surveyor to navigate the complexities of selling a cross lease property. Their expertise can help resolve issues, prepare necessary documentation, and attract the right buyers.
• Consider Conversion to Freehold: If feasible, converting the property from a cross lease to a freehold title can significantly increase its market value. While the conversion process involves costs, it simplifies ownership and appeals to a broader pool of buyers.

Need Help with Cross-Lease Properties? Contact Fluker Surveying Today!

Buying or selling a cross-lease property can be complicated, but with the right guidance, it doesn’t have to be. Our team of licensed land surveyors in Auckland specialises in simplifying the process. We help sellers in updating flat plans, resolving disputes, and exploring conversion options to maximise property value. For buyers, we offer cross-lease assessments to give you complete confidence in the property’s layout and regulatory compliance. 

If you need help with cross-lease conversions you can rely on our experienced team. We handle the legalities, work closely with councils, and provide tailored advice to help you avoid unnecessary costs and delays during title conversion.

Contact Fluker Surveying today.