Cross lease issues: ‘warts and all’ clauses

The basic outline (or ‘footprint’) of a flat on a cross lease title is shown on a flat plan deposited with Land Information New Zealand and attached to your title.

If you make additions that alter the footprint of your flat, the only way to correct the title is to deposit a new flat plan, and this can easily cost thousands of dollars.

If you’re selling your cross lease property, talk with us first to check that the flat plan is correct. If there have been footprint changes that are not recorded on the title, a purchaser can requisition the title. This might force you to amend the flat plan, or to drop the asking price or you could simply lose the sale.

However, if you’re prepared in advance, you can make sure your real estate agent includes a ‘warts and all’ clause in your agreement alerting purchasers to the footprint changes but requiring them to accept the title ‘as is.’ While this may put off some purchasers or cause them to offer less, its purpose is to prevent the purchaser from requiring you to alter the flat plan at your expense.

 

Posted: Mon 28 Aug 2017

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