If you are looking to purchase a property it is essential that you understand what type of property you are purchasing and the implications of this. There are various types of land tenure in New Zealand namely:
1. Fee Simple otherwise known as Freehold land. Purchasing this type of property means you own the property, the land and the right to live there for as long as you choose.
2. Leasehold if you purchase leasehold property you are buying the house and improvements and the right to live on the land. You do not own the land and have to pay the landowner rent for the period of the lease. Find out more about leasehold property.
3. Stratum title (can be freehold or leasehold) also referred to as a unit title. This type of property is managed by a body corporate and is subject to the body corporates rules and regulations.
4. Crosslease (can be freehold or leasehold) is a form of joint land tenure whereby the owner purchases a share in a piece of land. This form of land tenure is discussed in some detail below.
The title of the property will show what type of land the property is. You can get a copy of the title to the property from your lawyer who will also be able to explain the implications of purchasing that type of land.
More on Crossleases:
As mentioned above cross leases are form of joint land tenure. This means that you are in fact purchasing a share in a property that can have numerous dwellings on it. Each share is owned as tenants in common which means the owner can sell, or pass on their share in their will.
Say the cross lease consisted of a piece of land with three flats – each owner would own a one third share in the entire property. There would also be a lease agreement between the 3 owners which is usually a long term (usually 999 years) registered lease. This agreement would define any exclusive use areas (often each dwelling will have a private garden for the exclusive use of the owner), shared or common areas (such as driveways or communal gardens), insurance requirements and general provisions regarding maintenance, upkeep and division of costs.
Disadvantages of Crossleases:
Due to the fact that the property is jointly owned any maintenance or development work would require the consent of the other owners and the flats plan on the title would need to be amended to show the change in the buildings footprint. Most crossleases also state that the property can only be used for residential purposes. This could be a problem if you are intending to run a business from your home. If any one owner fails to comply with the terms of the cross lease the other flat owners may be able to compel them to sell their share of the property.
It is important to note that not all crossleases are the same so it is essential to get a copy of the lease agreement between the owners and go through this carefully with your solicitor prior to signing a Sale and Purchase Agreement.
For more information on crossleases and other forms of property ownership contact the Conveyancing Shop Lawyers in Epsom, Botany, Takapuna and Pukekohe.
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