What are Cross-lease properties?
Some properties in New Zealand are cross-lease titles. This means that the property you are buying owns a share of the underlying land along with other flat owners and then you each have a lease in place to use your flat (ie dwelling) and certain areas of the land.
At Collins and May, when you have an offer accepted on a property, we will do a report on the title. We will advise you on any easements or encumbrances registered against the title and provide you with a copy of the plan or flats plan highlighting the dwelling you are purchasing and what areas you get to use of the property.
It is important to carefully check to ensure that the dwelling you are purchasing matches the flat highlighted on the title.
If there have been additions or alterations to the dwelling (ie a conservatory) but these are not noted on the plan then this may be a title defect as the plans need to match your dwelling.
You also need to check areas you can use are correct. If any are not correct then technically you cannot use that area which could mean you cannot access the dwelling.
If they do not, you need to notify us as soon as possible.
What should I do about it?
If you notice that something on the plan does not match the property you are purchasing then you need to reach out to us as soon as possible.
There is generally a 10 working day requisition period in the ADLS Sale and Purchase Agreement which means if there are any defects a notice to the vendors solicitor can be issued requiring them to fix the issue before settlement. The vendor has five working days after receiving the notice to let you know if they will fix it or not.
If the vendor does not agree to fixing this or negotiating with them is unsuccessful then you have 5 working days to cancel the agreement.
How can a title defect be fixed?
Fixing a title defect yourself can be a costly and lengthy process.
If an alteration or addition is not on the flat plans, then the property has to be resurveyed and lodged with Land Information New Zealand.
You and your neighbour’s all need to sign legal documents to fix the title as well and all your bank’s need to consent if you have mortgages on the title. This can cost up to $10,000.00.
Purchasing a defective title could cause issues with your finance.
