New Zealand: Web of insurance issues in cross lease properties

Owners of cross lease properties face much the same complexities as owners of unit title properties in that your insurance claim affects your neighbours as well as you. The difference is that, unlike unit title properties (where all unit owners are covered by the same insurance policy taken out by the body corporate), cross lease properties often feature adjoining properties covered by different insurance policies.

Cross lease properties usually feature two or more flats built on one parcel of land, with long term (999 years is common) leases giving each flat owner the exclusive use of their flat. As an owner of a cross lease property, you are bound by the terms and conditions in the lease document registered against your title. The lease forms used for cross leases are reasonably standard, but several different forms exist. What applies to one cross lease development may not apply to another.

So, when it comes to insurance issues with a cross lease property, it all comes back to what the cross lease says. If you are a cross lease property owner – when was the last time you read your lease document? Have you ever read it? Do you know what your lease says in the event your property is damaged or destroyed by an earthquake?

Lease terms

Some cross lease property owners are negotiating their earthquake claims with the EQC and their private insurer, with little, or no regard to the terms of their lease. This is dangerous.

It is common for the lease to require the owner of each flat to individually insure their property. The lease usually states that if a flat is destroyed by any cause, including earthquake, then the flat owner will repair and make good that destruction or damage at their cost. But the difference between a cross lease property and a normal freehold property (where the owner also insures their own property) is that a cross lease owner has obligations to the other owners of all flats in the cross lease development. This means that you do not have total control over the process. Technically, the insurance must be in the name of the owners of all flats in the cross lease development. Any repair and reinstatement work on an individual flat must also be completed to the satisfaction of all flat owners.

So, if you do not have adequate insurance in place and there is a shortfall in the costs to repair or reinstate your flat, then you will need to fund the shortfall in cost yourself. The other flat owners can also require you to complete the reinstatement or repairs to their standards. In some cases, the other flat owners have the right to complete repair and reinstatement work and charge you for your share (based on your land share) of the cost.

In some cases, the lease provides for all of the flat owners to communally insure all flats (similar to the unit title approach). In that case, all flat owners must be involved in any decisions about repair or reinstatement of any of the flats.

You need to check the lease document to know which approach is specified for your cross lease development. Either way, co-operation with the other flat owners is likely to be necessary in the settlement of insurance and EQC claims. This makes sense where flats are adjoined and earthquake damage is likely to affect multiple flats in a similar manner.

Different insurers and delays

However, when every flat owner has their own insurance policy, which potentially means each flat is covered by a different insurance company, things get complicated.

Cross lease properties are facing lengthily delays to have their repair work signed off by the EQC and their private insurer, especially where the flats are joined by party walls and each owner insures their flat with different private insurance companies. The delays are commonly because of the interaction required between insurance companies and the differing scope of works and repair strategies for repairing damage, and the timeframes for completion. For example, one insurance company may commit to replacing one flat, but the insurer of the adjoining flat may deem that flat a repair. This may lead the owner to objecting and negotiating with their insurer, which then effectively puts the first flat's rebuild on hold until the second flat's insurance issues are resolved.

Another such issue is when one flat owner completes an insurance settlement with their insurer and their flat is subsequently demolished and that neighbour has no intention of rebuilding. How long will you be looking at an empty section? Do you enforce you rights against your neighbour? Do you take the opportunity?

As well as issues with the actual flats, another issue is remedial work to common areas, such as the common driveway. If owners are separately insured with different insurance companies, each owner's insurer calculates the cost of repair and that flat's share of it. It is then for all owners to obtain their insurance entitlement and coordinate a repair. Further issues arise if different insurance companies differ on the repair cost and share of each flat. The differences could result in a shortfall of funds available to complete the required repair. What will you do if one owner decides that the work doesn't really need to be completed and does not engage or contribute to the work even though they have received the money to do so?

The terms of the lease have far reaching consequences. There are many cross lease property owners who have completed negotiated settlements with EQC and their insurance company and will not be completing their obligations under their lease. These owners are in breach of their lease and could be exposed to legal action by other flat owners under the lease. If this is a situation you are in, or are potentially heading into it, then you need to seek advice.

Neighbours' consent and footprint

In repairing or rebuilding your cross lease flat, be aware that there are some things you cannot do without the prior written consent of the other land owners. The most common is to not alter, add or extend and existing building on the land or to alter the external dimensions of the flat.

If you are looking to comply with your lease obligations and complete any required repair or rebuild work, then remember your lease is only for the footprint of your defined flat area. If you are looking to rebuild and are taking the opportunity to redesign your house, then you may be heading for a host of legal problems. For example, if the rebuild results in your new house straying outside the original defined area on the flat plan attached to your title, you will be in breach of your lease and will not have legal title to the part of the house which is outside the footprint of the original house. Good luck trying to sell the rebuilt house.

There are ways to allow you to extend or redesign your rebuilt house, but you will need the other land owners (and their banks) to consent to this and it will involve a surveyor completing a new survey of the house and then the issue of new leases and titles for all flats that form part of the cross lease development. This is expensive and time consuming. If you are facing this situation, seek legal advice.

Many people who are completing repairs to their flat are taking the opportunity to do some other improvements. If this additional work involves structural alterations, your lease commonly has a provision regulating this as well. Most lease documents state that if you are undertaking or making any structural alterations, then you need the prior written approval of all the lessors, such consent not to be unreasonably withheld. Again, if you are facing this situation you should seek legal advice about the approval process and assist you if a lessor chooses to withhold consent.

If you are a cross lease property owner or looking to be one, become familiar with the terms of your lease before you settle your EQC or insurance claim and make sure you understand your obligations to the other flat owners. Take advice if you are unsure.


  • Cross lease properties are unlike unit title properties in that each flat owner usually has to arrange their own insurance.
  • Each flat owner does not have complete control over their insurance claim as all flat owners have the right to require that each flat is repaired or rebuilt to their satisfaction, even if there is a shortfall in insurance cover and the flat owner does not want to fix the damage.
  • Care needs to be taken when you are settling a cross lease insurance or EQC claim that any rights the other flat owners have are observed. Flat owners who cash settle their insurance claim and then do not repair or rebuild may have issues with their neighbours.
  • Delays can occur even if your insurer has approved your claim if other flats' insurance claims have not been approved or settled.
  • Problems emerge when different insurers are involved and make different assessments as to common damage e.g. driveways.
  • Note that repairs or rebuilds which change the external footprint or envelope of a cross-lease property can create legal problems, usually requiring the consent and re-issue of leases and titles for all flat owners
  • Structural alterations also need the consent of all flat owners

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions