Types of Title - what do they all mean...

There are various types of titles for properties and some carry with them extra obligations.  

Here is a summary of the different types of title:

Fee simple: An owner owns the land and (if applicable) the improvements on it. This title is also known as “freehold”.  

A fee simple title gives the owner/s of the property unrestricted rights to use the land.  This is subject only to any land covenants or easements registered on the title that may impose restrictions on how the owner can use the land, or in the case of easements, who can use parts of the land.  

Owners have the right to mortgage the property, sell the property, or gift it by Will.  Generally, most stand-alone residential properties will be on fee simple titles.  

Cross lease: A cross lease means that all owners own an undivided share in the underlying land (the fee simple) and each owner leases their flat (house) from the other owners, generally for a term of 999 years from the commencement of the lease.   

The flats plan (attached to the title) will show areas of land for exclusive use of each owner and the common areas.  There are restrictions on making alterations to a cross leased property and any changes to a flats plan or building may require the consent of neighbours in the other flats and a new survey plan, which is a costly exercise.  

In addition, the other flat owners will very likely require any lessee making alterations to pay their legal fees in relation to obtaining consent to the work being undertaken on the leased property. 

Unit Title: This is a common type of title for apartments and townhouses. The building is managed by a Body Corporate, and each owner has an “ownership interest” (previously called a “unit entitlement”) which gives them their voting rights in relation to the Body Corporate. 

There are rules and obligations which owners should be aware of. There are also now strict requirements for vendors to provide disclosure about the unit title complex to any potential purchasers.  

Leasehold: The owner leases the land from another party and is required to pay an annual lease fee.  This is called a ground lease and is usually for a long term.  

Company Share: Whilst this isn’t a form of title per se, you will still come across this type of ownership structure, especially in Wellington.  The land and buildings on the land will be owned by a company, and each owner receives a right to occupy (often called an occupation licence/lease) and shares in the company.  New owners coming into the company share complex generally need to be approved by the directors of the company.

There are plenty of potential traps for purchasers in all types of titles, which can get very stressful and expensive. It is recommended that you seek legal advice whenever buying, selling, and/or renovating a property to ensure that you can meet any obligations relating to your particular type of title.