Andrew Boyd 

Working in Real Estate





Title Definitions


Freehold or “fee simple’ title is the greatest legal estate in land.  It confers on the owner almost unlimited rights in relation to the land.  Those rights have been curtailed by various statutes.  For example, all land in New Zealand is subject to the Resource Management Act and, subject to the zoning of the particular land, it is not possible to carry out any activities on the land which are not permitted as of right without a resource consent. 

In recent years, it has become increasingly popular in subdivisions, for developers to register land covenants against freehold titles regulating such matters as building materials that can be used on the land.  This is a private form of regulation of the activities that can be carried out on freehold land.



Leases can range from as short as a weekly tenancy to “ground leases”, which effectively run in perpetuity.  All leases share the common factor of being granted by a person with a greater estate in the land.  That greater estate may be either freehold or leasehold.  Where the lease is granted by the owner of a leasehold estate the new lease granted is called a sublease.  In the current market leasehold developments have become increasing popular, particularly in Auckland where they have been used in the Prince’s Wharf, Viaduct Harbour and Scene developments, among others.  In those cases the apartments within the buildings are held by the purchasers by way of a registered lease and the lease sets out the terms and conditions on which the apartments are occupied.  For example, as to payment of rent, rent reviews and the length of the term of the lease and whose responsibility it is to maintain the apartment and the building in which it is in. 



The Unit Titles Act was passed in 1972.  It was recognised that the time had come to make provision for individual ownership of units where the existing common law relating to freehold titles struggled to contend with the complexities of the ownership of units in multi-unit developments.  The Act made provision for subdivision of freehold or leasehold land into two or more principal units with accessory units, for example carparks, and made provision for regulation of the common interests of the owners of apartments within the building. 

Over time a number of problems have been identified with the Unit Titles Act and a review of the Act by the Law Commission is currently under way.  The review is likely to identify areas where the Act can be updated to deal with some of the problems identified and also to catch up with changes in lifestyles and expectations. 

The Act is somewhat inflexible in dealing with alterations to the units among other things.



The form of title known as cross lease was created in the late 1960s and early l970s as a response to local authority requirements relating to minimum lot sizes for subdivisions.  At that time the quarter-acre dream was still a reality, but an increasing population put pressure on to create infill housing. 

The response was to create a cross lease which did not then constitute a subdivision in terms of the Local Government Act, meaning that local authority approval for splitting a parcel of land could be avoided.  In order to explain what a cross lease title is, it is best to use an example. 

In the case of a two dwelling cross lease, both owners own an undivided share (usually one-half each) in the underlying land and each of them then takes a lease of their respective dwellings usually for a term of 999 years.  The leases confer exclusive possession on the respective owners of their respective dwellings and set out the terms on which each owner occupies his or her respective dwelling. 

In some cases the ability of the owner to make structural or other alterations to his or her dwelling is severally restricted and this can cause problems, especially where the two owners are not seeing eye to eye.  Also, even if the alterations to the dwelling are carried out with the consent of the other owner it is necessary to show the amended dwelling on a replacement plan deposited at the Land Titles Office in order to ensure that the lease relates to all of the new dwelling and not just the original dwelling.  Failure to do this can cause the loss of a sale in some circumstances. 

Since the introduction of the Resource Management Act 1991 cross leases have constituted subdivisions so all of the benefits of avoiding the subdivision regime were lost then.  Accordingly, it is now very rare for new cross leases to be created.




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