When buying a house it’s important to know exactly what you’re getting for your money.  A fee simple title (or freehold estate) gives you the greatest group of rights in the use, enjoyment and alienation (i.e. the power to dispose) of the land. However, these rights may still be restricted by a covenant over the property, such as a building or height restriction.

A leasehold estate gives you certain rights for a defined period of time. Within the Napier City boundaries, the fee simple title to a leasehold property will usually be owned by the Napier City Council or the Hawke’s Bay Regional Council. If you own a leasehold property you will incur a lease rental, payable to the owner of the fee simple title. As has been reported recently the rental figures have increased significantly during the renewal process. It is therefore useful to know how long the lease will run for and what the current rental is if you intend to purchase a leasehold property.

Lastly, a cross lease property will give you an undivided share in either a fee simple or leasehold title along with the other owners of adjourning cross lease properties. The most common example is where there are two or more units or flats on a common section. The lease instrument registered on the title to the property sets out ‘rules’ for what you may and may not do with the property. It is important to make sure you are aware of what the lease instrument says when you are considering purchasing a property. There are a number of older lease instruments which do not provide for exclusive use areas, so while there may be a fence or an area that appears to be for your exclusive use, the other owners of the common land are also able to use these areas.

Next time you’re looking at purchasing a property give us a call to discuss the title and whether there are any interests that may restrict the way you use it.

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