What is a cross lease and what does it mean for me if I own one?

A couple bought a cross leased property as their first home.  The other owner in the cross lease started carrying out loud renovations to their property, and allowed tradesmen to come over areas of the property that the couple thought were exclusively theirs to use.  They sought legal advice.

Especially common with flats and townhouses built before the 1970’s, a cross lease is where several owners jointly own land and together lease buildings and areas within that land to each other. 

Many people living in a cross-leased property may never have seen the actual cross lease document for the property, if they know it exists at all.  However, cross lease documents contain important provisions which all owners should be aware of.

It is particularly important to check your cross lease because many have provisions unique to your particular property, particularly if an issue arises with your fellow cross lease owners.

Cross leases will often specify that certain actions may only be carried out with unanimous (or sometimes majority) approval of all owners in the cross lease complex.  If one owner, makes a structural alteration to their flat, paints their flat a certain colour, or rents it out to a new tenant without the other owners’ prior written consent, they may find themselves in breach of their cross lease and open to action being taken against them by those other owners.

In the above example, the renovations were structural, so the couple were able to require the other owner to seek their consent before proceeding any further.

The cross lease will also set out the procedure for taking actions like the above which require approval, as well as for resolving disputes between owners.

Cross leases typically set out what the process to follow is in the event that one of the owners is in breach of the cross lease.  Many go as far as to stipulate that, if an owner fails to remedy their breach within a certain period, the other owners can force the sale of the breaching owner’s part of the property.

If you own a cross leased property, it pays to be aware of your obligations, and obtain legal advice if you believe there has been a breach.