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999 Year Leasehold Question

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  • 999 Year Leasehold Question

    Hi

    I am looking at a particular brick and tile unit, and on the LIM report it says the estate is fee simple (1/4 share) and also leasehold with a term of 999 years from the mid 60's. I don't think there is any ground rent charged.

    Is this something I should be worried about?

    Thank you

  • #2
    Sounds like a standard cross-lease. Was a standard way to divide a property rather than subdividing.

    There are issues with a cross lease. Search for that and there should be topics on it.

    Comment


    • #3
      Yes this is a cross-lease and not a leashold property.

      999 years is the usual common indicator because it's unlikely it will affect anyone in the near future.

      Depending on what you want to do with the property it shouldn't be too much of an issue. If you want to make changes to the property you do need all those that have a share in it to approve. This can slow things down. Doesn't have to be a concern if all you are doing is renting out a standard unit.
      [email protected]

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      • #4
        I once owned a cross-lease. On the deed it said “999 year lease from the Crown” I thought that was cute.

        Comment


        • #5
          There's a lot of mis-conception out there about cross-lease, with many people thinking it is the same as leasehold. There is often a ground rent but it's usually 1 cent a year or something token, aside from increased requirements on neighbour's permission to do certain things, it's not too dis-similar from owning outright freehold. Unless of course we find a way to live for thousands of years

          Comment


          • #6
            Thanks for the replies everyone. I'm not planning on living for a millenium so hopefully that shouldn't be too much of an issue!

            Comment


            • #7
              999 years suggests a cross-lease, as already advised.

              The fundamental difference between a cross-lease and a leasehold property is that with a cross-lease, you are one of the landlords, as well as one of the tenants. With a leasehold, you are just a tenant.

              For example, assume that the site has two flats, one "owned" by X and the other by Y. The whole site is owned by X and Y, and they then lease one flat to X and the other flat to Y (hence the expression "cross lease").

              So the way to make sure that this is a cross-lease is to check that you are one of the landlords under the 999 year lease.

              (And one way to improve the value of all the flats on the site is to convert the site from a cross-lease into standard separate titles, if allowed under the District Plan.)
              Last edited by Green Fish; 26-05-2009, 02:48 PM.

              Comment


              • #8
                Cross leases generally mean that if you want to alter the outline shape of your house you need to get a flats plan altered as part of the title. I am pretty sure you will need the permission of the other holder/s.

                Old cross leases do not define the individual areas, but more recent ones do. Plusses & minuses for both.

                Make sure you know who the other holders are, could be one holding 3/4, or 3 others. Although they could change, it helps to know at the outset if they are little old ladies or militant developers.

                Your lawyer will check out that everyone has their outlines drawn correctly as part of the title checking process. Often it is agreed (ie if a carport has been added) just to let it go, but a clause has to be added to the agreement, effectively saying as is where is, and the other people on the lease will need to sign a letter as I did when the neighbours sale went through.

                I would also get a copy of the cross lease from https://www.linz.govt.nz/survey-titl...opy/index.aspx Not sure which topic it is under, maybe someone else can help, or ring the title people.

                In my situation, the little old lady (who has recently sold) behind has permission under the cross lease to build on her back lawn (she has 2/3, I have 1/3). Funnily enough I discovered that my boss used to own the site, and had the lease drawn up with that little gem in it years ago! My lawyer never told me when I bought the place, and it was only me being nosy & ordering a copy that bought it to light - along with the list of previous owners implicating my boss (a free lesson on good business practice from him!)

                Also, as I may want the whole site one day I am refusing to subdivide, and that bought down the value of her place a bit when she sold. I can't withhold permission forever, and could be forced to agree by law (especially if they pay), but it would be painful & expensive for them.

                So far this hasn't really been a problem for either of us, but could be.

                In Tauranga subdivision costs are huge, I was given an estimate of about 40k approx 5 years ago.
                Last edited by Tan; 26-05-2009, 03:42 PM. Reason: Extra info

                Comment


                • #9
                  Tan,

                  In my opinion, you can refuse to subdivide forever. But it would benefit the whole site if it was converted to standard titles.

                  It should not cost 40k:

                  (1) Surveying: Given that a plan has already been prepared and deposited, no more than 2k (assuming that you will subdivide using the old flats plan).

                  (2) Lawyer: 2k

                  (3) Council contributions: Under 2k. Are you creating additional traffic? No. Extra Sewerage/Water/Drainage? No. The council incurs no additional costs and it cannot use your subdivision as a device to make money.

                  Comment


                  • #10
                    Originally posted by mlkmnz View Post
                    Unless of course we find a way to live for thousands of years
                    Even then you still own the land. There maybe a few issues such as no longer having exclusive use of certain parts but I am sure a new cross lease could be entered into.

                    Comment


                    • #11
                      Originally posted by Tan View Post
                      Often it is agreed (ie if a carport has been added) just to let it go, but a clause has to be added to the agreement, effectively saying as is where is, and the other people on the lease will need to sign a letter as I did when the neighbours sale went through.
                      If the other lessors sign a letter then no amendment to the agreement is needed and you are unlikely to have any issues on sale, even if the survey plan hasn't been updated. This is because the standard Agreement for Sale and Purchase was recently amended to provide that the purchaser cannot cancel the agreement for that reason, provided that consent of the other lessors is provided under clause 7.3.

                      Originally posted by Tan View Post
                      I would also get a copy of the cross lease from https://www.linz.govt.nz/survey-titl...opy/index.aspx Not sure which topic it is under, maybe someone else can help, or ring the title people.
                      There are a few different forms which were/are commonly used. Your lawyer can get the correct one, make sure they do so and that they give you a copy, in case you need to check whether you are allowed to do something later on.

                      Comment


                      • #12
                        (3) Council contributions: Under 2k. Are you creating additional traffic? No. Extra Sewerage/Water/Drainage? No. The council incurs no additional costs and it cannot use your subdivision as a device to make money.
                        Council contributions about 30k.

                        There are a few different forms which were/are commonly used. Your lawyer can get the correct one, make sure they do so and that they give you a copy, in case you need to check whether you are allowed to do something later on.
                        Get a copy of the one attached to your lease. It may have alterations.

                        Comment


                        • #13
                          Originally posted by Tan View Post
                          Council contributions about 30k.
                          GF is right that it is doubtful the Council couldn't justify that in light of recent case law. Unfortunately what they charge in practice isn't necessarily lawful though.

                          Might be worthwhile asking them again if it was a while ago.

                          Originally posted by Tan View Post
                          Get a copy of the one attached to your lease. It may have alterations.
                          Yes, hence why I suggest that the lawyer should do this. EmmPlusPlus could obtain it from the link you provided, but it is a bit technical for a lot of people and s/he would have to know the instrument number.

                          Comment


                          • #14
                            Council contributions: Under 2k. Are you creating additional traffic? No. Extra Sewerage/Water/Drainage? No. The council incurs no additional costs and it cannot use your subdivision as a device to make money.
                            Im guessing Greenfish dosnt do much planning work.. Development contributions under the LGA or Financial Contibutions under the RMA will be applicable. It depends on council policy.

                            Comment


                            • #15
                              I don't do much planning work, but I passed Legal Systems, so I have a basic understanding of the obvious.

                              It doesn't depend on council policy. (If that were the case, the council could charge millions per subdivision, which they could then use to pay themselves millions in salaries.)

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