Our recent post about cross lease update surveys has prompted many property owners to contact us with questions about their options. We regularly work with clients who discover cross lease issues during property sales—problems that can delay or even derail transactions if not addressed properly. This article explains the key differences between cross lease updates and conversions, helping you decide which approach best suits your situation.

Understanding Cross Lease Properties

Cross leases are a unique form of property ownership in New Zealand where multiple individuals own an undivided share of the entire land and lease specific areas from each other, typically for a long term such as 999 years. This ownership structure was popular in the past as a way to bypass subdivision requirements, but has become increasingly problematic with the way that cross leases are now administered.
The fundamental challenge with cross lease properties is that they often lead to disputes among neighbours, as any changes to the property require consent from all parties involved. This can be cumbersome and may significantly hinder property development or renovations.

When Cross Lease Issues Surface

Most cross lease complications emerge at the worst possible time—during property transactions. We regularly hear from clients (and their real estate agents) who have accepted an offer on their property only to discover that:

• Extensions or alterations completed years ago never made it onto the flats plan
• The garage or deck that came with the property isn’t shown on the legal documents
• The exclusive use areas don’t match what’s on the ground
• Purchasers’ lawyers have flagged discrepancies that threaten to derail the sale

These issues create urgency, stress, and potential financial consequences if not addressed promptly and correctly.

Cross Lease Updates: When and How

What is a Cross Lease Update?

A cross lease update involves modifying the existing legal documentation to accurately reflect the current state of the property. This is necessary when physical changes have been made to buildings or structures that aren’t shown on the registered flats plan.

Common Scenarios Requiring Updates

• Home extensions or alterations completed without updating the flats plan
• New structures like garages, decks, or conservatories added to the property
• Changes to exclusive use areas or access ways
• Discrepancies between the legal documentation and physical reality

Costs and Timeframe

The cost of updating a cross lease plan typically includes:

• Surveying costs: Varying based on complexity
• Council fees: $2,000 for the application deposit in Auckland
• Legal fees: Approximately $4,000

The timeframe for completing an update ranges from 2-4 months depending on complexity, but can be expedited when a sale is pending. Our team prioritises urgent cases to prevent sales from falling through.

Cross Lease Conversions: The Complete Solution

What is a Cross Lease Conversion?

A conversion involves transforming a cross lease title into a freehold (fee simple) title, effectively creating a standard subdivision where each owner has complete and independent ownership of their land and dwelling.

Benefits of Conversion

• Increased Property Value: Converting to a freehold title can significantly increase the property’s resale value, often by 7-20%.
• Simplified Ownership: Eliminates the need for neighbour consent for property alterations, providing full control over the land and dwelling.
• Reduced Disputes: Removes the potential for disputes with neighbours over property changes.
• Long-term Solution: Addresses all current and prevents future cross lease issues.

Costs and Timeframe

The cost of conversion typically includes:

• Legal fees: Approximately $6,000
• Associated costs: Survey, council fees, and potentially physical works

In Auckland, total conversion costs typically range from $38,000 to $40,000 for a 2-lot cross lease. However, in some cases, particularly for simpler conversions, the cost can be under $15,000 plus GST per title.

The process usually takes 8-12 months, depending on the complexity and physical works required. This timeframe makes conversion more suitable as a proactive solution rather than a reactive one during a property sale.

Case Studies: Real Solutions for Auckland Property Owners

Kohimarama: Successful Cross Lease Update

Our team assisted property owners who needed to update their cross lease flats plan to resolve issues identified during a pre-sale inspection. The update was completed efficiently, allowing the sale to proceed without delay or price renegotiation.

You can read more about this project here.

Remuera: Value-Adding Conversion Project

We worked with property owners who decided to convert their cross lease to freehold before putting their property on the market. Despite the initial investment, the conversion significantly enhanced the property’s marketability and value, with the owners achieving a premium price compared to similar cross lease properties in the area. This project demonstrated how proactive conversion can deliver substantial financial benefits when selling.

You can read more about this project here.

Making the Right Choice: Update or Convert?

When to Update

• You need a quick solution during a property sale
• All structures have proper building consent
• You have good relationships with cross lease neighbours
• The cost of conversion is prohibitive

When to Convert

• You’re planning to hold the property long-term
• There are ongoing disputes with neighbours
• You plan to make significant changes to your property
• You want to maximise property value
• You prefer complete autonomy over your property

Taking Action: Next Steps

Whether you’re facing an urgent update situation during a property sale or considering a proactive conversion to enhance your property’s value and simplify ownership, the key is to seek expert advice early in the process. At Tripp Andrews, our team of surveyors, planners and engineers are experienced in navigating the complexities of cross lease properties in Auckland. Contact our team today for a confidential discussion about your cross lease property and discover the most appropriate pathway forward.