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What is a cross lease?
A cross lease is where a number of people share in the ownership of a piece of land (as tenants in common which means they can sell, or pass on their share in their will). The homes that they build on the land are actually leased from the other land-owners. The houses are usually flats or townhouses. For example, if you purchase a flat in a three flat development that is a cross lease, you will become the registered proprietor of:
•An undivided one third share in the land and buildings (as tenant in common in equal shares) with the other owners of the other two flats, and
•A long term lease, from all three of the tenants in common (including you), for your particular flat.
Disadvantages of cross leases
The problem with this type of ownership is:
•The rights of the owner depend on the terms of the particular lease, which has usually been arranged by a developer who built the development but now has no further interest in it.
•The usual term of a cross lease is 999 years, whereas the physical or economic life of the house will be a lot shorter.
•You must comply with the covenants set out in the lease - if you fail to comply, the other flat owners may be able to compel you to sell your undivided share in the fee simple title.
•You will usually need to get the unanimous support of all the owners of the cross leased homes to make any kind of decisions for example, decisions concerning common spaces such as driveways or car parking areas. If agreement can’t be reached it might involve a lengthy arbitration.
•When homes are altered, unless the cross lease and building plans are changed, the original cross lease will not include the alterations without additional surveying and legal costs. Furthermore, you will need to get the agreement of the other lease-holders before you can do the work.
•Most cross lease owners believe that their title is as good as an ordinary freehold title without understanding all the implications.
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