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  1. #1

    Default Section with crosslease title ?


    I'm looking to buy a section to build a PPOR.
    There's one suitable here in auckland central, it's big, flat and supprisingly affordable (asking prive well under CV). It has services connected to it.
    I immidiately knew there must be a catch, and yes, there is one...
    It's on a crosslease title, together with 2 adjacent properties. I never seen a secion on a crosslease....

    Two options
    1. convert it into 3 freehold titles. I know there are big costs involved. I have spoken to lawyer, council, linz and surveryor. It not possible to estimate the cost without doing some due diligence (and investing some $$$ up front). It might be possible to split costs with the vendor who also owns another lot on this lease (by split I mean discount the price of the section for sale). Would $100k be a reasonable estimate (+-25%) ?

    2. build on a cross lease section. This means that I would have to have the plans first and then get other leasees to approve them, then seek councils consent. It might seem like an easier option, but I'm concerned whether there are any catches involved ? For example, my understanding is that a surveyor (for the house plans) will have to survey and submit details of other lots ? which might be a problem if any of the other properties have illegal modifications (dont match exsisting plans) ? What else might throw spanner in the works from this perspective ?

    I'm looking for some input, whether it is even worth looking at option 1 or 2, which would be better, potential caveats, stuff I should check prior making any offers, etc, assesment of riskyness. It does look as some risk and effort, however.... location is great, sections of this size is around 1000sqm, which meand it has a further subdivision potential, and price is already discounted and further negotiable and it might just be worth the risk....

    Thanks in advance.

  2. #2
    Join Date
    Jan 2011


    Cross lease isn't necessarily a problem. The initial problem will be the extra hoops you will need to go through before you can build (and cost too). The total area of all the buildings on the section come into play so the plans would need to be sorted before you commit serious dollars.

    Cross lease agreements are differ. You will need your lawyer to go over the agreement first and see from there whether you want to pursue any further.

    Another factor will be resale value when you decide to move on. People prefer freehold properties.

  3. #3
    Join Date
    Dec 2010
    Cambridge, NZ


    If you're going to jump in and get all the consents required from the other owners (as a condition of purchase), imo you should definitely check out the feasibility of converting to freehold titles since everyone concerned is going to have to sign documents already. In some respects it might save money...no flats plans for example.

    You want a very broad due diligence condition that gives you sufficient time to check all this out and get it tee'd up. That said, it shouldn't take too long, presumably, to talk to the vendor, neighbour on the third cross lease, and council/surveyor for likely costs. Don't forget the neighbour/vendor banks....I find it hard to imagine they wouldn't want a change to freehold and a new mortgage, but best not to assume it.....some low grade people at banks will be unable to deal with anything outside the square.


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