Steps to selling a cross-lease property
When you are selling a Cross-Lease property it is important that the flats plan correctly reflects the location and size of the existing dwellings and improvements on the land.
Do some research
We recommend that you view the flats plan with your knowledge of the property and ascertain any issues BEFORE publicly listing the property for sale. This way you give yourself the best opportunity to rectify and consider any issues involved with selling a property. Given the current market, it is common to have only a couple of weeks between listing a property for sale and the tender or auction date. Therefore, if any issues arise during this time, there is very little time for you to research and work out the best way forward.
What is a defective cross lease title? and can it be remedied?
Scenario A: If the following applies, the remedy can be by way of written consent by ALL flat owners in the case of a cross lease development:
If the improvement is NOT ATTACHED to the "flat" or dwelling and IS on the exclusive use area for that "flat". For example, a garage or a granny flat. This structure can be either enclosed or not. If the improvement is ATTACHED to the "flat" and IS in the exclusive use area for that "flat" but is NOT ENCLOSED. For example, a carport.
Such written consent should be signed, dates and should include the names of all registered proprietors in the cross-lease development, the title and the lease numbers and an explanation of exactly what is being consented to. It is worth noting that such consent can be relied on even after a change in registered proprietors and should be passed on to new owners as part of the sale disclosure.
Scenario B: If the following applies, the remedy will need to be by way of updating the title:
If the improvement is ATTACHED to the "flat" or dwelling and is ENCLOSED. For example, an extension to enlarge (or reduce) a room, an attached indoor-accessed garage, or a conservatory. If the improvement is located on (or is partially located on) the common area but designed for the exclusive use of one flat owner. For example, a garage that has been erected on what was originally a common area (for example a shared driveway). If a structure has been REMOVED from the flats plan but is referred to as part of the legal description on the title. For example, if the legal description is "Flat 1 and Garage A on Deposited Plan XXX" and the garage has been subsequently demolished. In this example, it could be more cost-effective to reinstate the garage than update the title. If the title needs to be updated, the following will need to be undertaken (which can result in a cost of ten/s of thousands of dollars) and can take several months to complete: a) The land will need to be resurveyed; b) New legal titles will need to be issued; c) All owners in the cross-lease development will need to sign the documents to enable the issue of new titles; d) Mortgagee consent of all owners in the cross-lease development will need to be obtained; and e) Council consent will need to be obtained. We note that Councils treat this similarly to a "subdivision" and can impose requirements to give such consent, some of which can be costly. For example, upgrading the fire protection between any dwellings that are attached to another, or upgrading the services to the property, particularly if the services are shared.