Considering purchasing a cross lease property? They are often the kind of property which buyers approach with the most caution.

A cross lease is where several owners jointly own land and together lease buildings and areas within that land to each other. 

Cross lease documents include important information, procedures, and provisions which all owners should be aware of, especially when considering any renovations, modifications, or alterations that may not be on the Flats Plan.

It is important to understand your cross lease documentation so you can act within the requirements of those documents. 

The following flowchart outlines a typical decision-making process where extra works have been completed, or there is an additional structure which is not on the Flats Plan:

 

Structures on common property

If one owner has exclusive right to an area that is otherwise shared/common property, such as by erecting an extra structure on common property such as a shared driveway, pathway, etc., this can cause the cross lease to be defective.

Attached Structures

Regardless of what the extra structure is, it is imperative to check whether it is physically and directly attached to the main flat dwelling. Examples of attached structures include decks and attached verandahs, kitchen or room extensions, and some carports.

If the structure is not attached to the main flat dwelling, this can be easier to manage by seeking a letter of written consent from the other owners which can be kept safely and disclosed at the time of sale.

Enclosed structures

Fully enclosed structures will have four walls (including any shared walls) and a roof.  For example, a shed or garage are enclosed structures, whereas a carport or verandah are not.

Outcomes

If the structure is attached but not enclosed (such as decks or some carports), it is best practice to seek written consent from the other owners.

If the structure is both attached and enclosed, this provides a myriad of challenges given that the structure does not match the Flats Plan. This causes the new structure’s area to be incorrectly recorded in leases from your fellow owners- this is formally called “a defective title”. 

It is essential to disclose any potential or actual defective titles to purchasers, as it may restrict available lending and/or insurance cover. To resolve a defective cross lease title, either:

•  Update the Flats Plan.
•  Convert the cross lease into a fee simple title.

See more on remedies available in these circumstances in our article here  

Building Consent

Another aspect that will need to be considered is whether the works (or potential works) would have required building consent.  Advice from a Licensed Building Practitioner is recommended if building consent was not obtained.   

Whether you have already built on a cross lease title, or you are considering doing so, it is recommended to seek independent legal advice to get the right advice for your unique situation. 

Leading law firms committed to helping clients cost-effectively will have a range of fixed-price Initial Consultations to suit most people’s needs in quickly learning what their options are.  At Rainey Collins we have an experienced team who can answer your questions and put you on the right track.

Laurie Pallett and Raiyan Azmi