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999 Year Leasehold Question

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  • Green Fish
    replied
    Sounds a bit like "good cop / bad cop".

    Whatever, the council cannot adopt a "Robin Hood" policy (which tends to involve robbing the developers to pay for: (1) Higher salaries for council officers; (2) More junkets for council officers; and (3) More money to support their (invariably) lefty causes.)

    I suggest applying for the resource consent now, getting the contitional approval, and then objecting. By doing this, you at least get plugged in to the groundswell of litigation that is emerging.

    Leave a comment:


  • Davo36
    replied
    Yeah the councils would just charge whatever they reckon they can get away with.

    So they'll have a business arm of the council saying "Come to the North Shore (for example) we're a great place to start a business..." and then the regulatory arm saying "It'll cost you $x00,000s of dollars to set that business up here. We only take bank cheques and you have to pay up front. Next please."

    And so the business stays where it is and makes better use of it's existing premises. Seen it happen dozens of times.

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  • Shalodge
    replied
    Interesting all right! Joe Average builds a dwelling and pays full charges but a smart developer knows all the tricks and gets away with it. After the North Shore case many developers simply threatened TLAs with a Judicial Review and were given large discounts but poor old Joe just keeps on paying!!

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  • Davo36
    replied
    Sounds to me like you were incorrect and it was a crosslease property Kiwi10.

    I recently looked at an industrial building for sale in Albany. The North Shore City Council charged around $150k in development contributions to have 3 industrial units put on one large section.

    The developers got around it by using a new company for the development, doing the development, getting Code Compliance and then putting the company into liquidation! Dunno how they got CCC prior to paying the DCs but they did. And they council agreed not to pursue the fees - saw an email to that effect. Interesting.

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  • Kiwi10
    replied
    Hi, this could be an obvious question but I looked at a house once that had "feesimple as to an undivided 1/3 share and leasehold in lease" which also showed as a 999 term lease. I thought this showed that it was cross lease and lease hold and so I wasn't interested.
    From this thread it looks like I was incorrect.Can anyone confirm that for me?
    Thanks

    Leave a comment:


  • Shalodge
    replied
    (If that were the case, the council could charge millions per subdivision, which they could then use to pay themselves millions in salaries
    Exactly ... and dont think Councils arent doing this....

    Development Contributions under the LGA can only be charged where the TLA has a Development Contributions Policy in place. This Policy sets out how DCs will be charged for resource consents such as land use (subdivision). They are based on a reasonably clear legislative framework in the LGA but interpretation varies.

    Many Councils take a broad view of the provisions which allow them to charge a development contribution if that development causes them to have to build additional infrastructure or enlarge or extend existing infrastructure etc. They gaze into the crystal ball and predict growth in the district and then dream up a range of projects to cater for that growth.

    In practice these projects have a growth component but are usually mainly renewal. The Policy will set out the % that is 'deemed' to be growth related and then apply a formula to obtain the fee to be charged on a Household Equivilent Unit basis.

    Some of these projects will be district wide others will apply to specific areas only so Development Contributions will depend on the proposed projects in the area and the degree to which they are driven by growth. What is certain is that Councils tend to maximise there DC's by using the DC Policy and thereby reducing the rates burden.

    In a recent High Court judicial review the North Shore CC DC policy was found to be in breach of the LGA. (They were charging too much). IMHO councils are using the DC provisions to levy a "development tax" .. and this is not what the LGA intended and in fact the legislation makes it clear that it not a general tax..

    Dont confuse DCs with Financial Contributions under the RMA. The reason many councils moved to DCs under the LGA with their introduction in the 2002 ammendment was very cynical in my opinion. The RMA contains appeal provisions against council decisions (such as Financial contribution levies) while the LGA does not. The only way you can appeal DCs is through the Judicial Review process.. far more costly..

    There is much more to this subject but I believe that many Councils are abusing the DC provisions because they see it as a better alternative to rates. e.g The Robin Hood principle..

    Bottom line.. If you convert a cross lease you will be faced with a DC charge that may be significant depending on your councils DC Policy and the area.. (i.e is it a high growth area).. You should ask first before you go down that path..

    Russell ORR

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  • Green Fish
    replied
    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.)

    Leave a comment:


  • Shalodge
    replied
    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.

    Leave a comment:


  • Xav
    replied
    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.

    Leave a comment:


  • Tan
    replied
    (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.

    Leave a comment:


  • Xav
    replied
    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.

    Leave a comment:


  • CJ
    replied
    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.

    Leave a comment:


  • Green Fish
    replied
    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.

    Leave a comment:


  • Tan
    replied
    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

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  • Green Fish
    replied
    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.

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