Cross-Lease Owners: Big Court Decision Changes the Rules Between Neighbours

A recent New Zealand Court of Appeal decision has significantly changed how cross-lease neighbours must deal with each other — especially when it comes to renovations and alterations.

If you own (or are buying) a cross-lease property, this is important.

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The Issue: Can a neighbour say “no” to your plans?

Most cross-lease titles require you to get your neighbour’s written consent before making changes (like adding a deck, extending, or altering the layout).

The key rule has always been:

Consent cannot be unreasonably withheld

But until now, what “unreasonable” actually meant has been unclear — and often used by neighbours to block projects.

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⚖️ The Court of Appeal has now clarified the test

In a 2026 decision (Liow v Martelli), the Court of Appeal has reset the approach entirely.

The old thinking focused heavily on:

• How the changes might negatively affect your neighbour (light, views, etc.)

The new approach is much more balanced.

👉 The Court said decisions must be based on:

• Overall fairness between all owners
• A “give and take” / “live and let live” mindset
• The reality that cross-leases are long-term shared arrangements — typically 999 years

Importantly, the Court recognised that over a 999-year term, it’s entirely realistic that:

Properties will be altered, redeveloped, or even rebuilt multiple times.

That means neighbours can’t expect things to stay exactly the same forever — change is part of the arrangement.

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🚫 What neighbours can NO longer do

This decision makes it harder for neighbours to block projects just because they don’t like them.

They can’t:

• Refuse consent out of personal preference or dislike
• Focus only on minor or subjective impacts
• Use consent as a “veto power” over development

There is now less scope to frustrate reasonable improvements.

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✅ What IS considered “reasonable”

A neighbour can still refuse consent — but only if there is a genuine, sensible reason, such as:

• Real impact on the property (not just trivial concerns)
• Legitimate issues affecting the shared ownership arrangement

The key shift is:

It’s no longer about protecting one neighbour — it’s about balancing everyone’s interests fairly

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⚠️ Why this matters for owners and buyers

This decision affects a huge number of cross-lease properties across NZ.

Practical implications:

• ✅ Easier to carry out renovations (in many cases)
• ❗ Still need consent — but refusals must now be justified
• ⚖️ More disputes likely to be decided on common sense, not technical arguments
• 🧾 Highlights the importance of getting proper advice before altering a cross-lease property

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💡 Key takeaway

Cross-lease living has always required cooperation — but the Court has now made it clear:

You can’t unreasonably block your neighbour — and you also can’t ignore their interests.

And over a 999-year lease, change isn’t just possible — it’s expected.

It’s about balance, fairness, and practicality.

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If you’ve got a cross-lease property and are thinking about making changes (or dealing with a neighbour dispute), it’s worth getting advice early — this area is evolving quickly.

More in-depth formation can be found here:

Love thy neighbour? Court of Appeal rules on what ‘reasonableness’ means in cross-lease consents

and here:

Neighbours at war: court wades into cross-lease crossfire

Disclaimer: This article provides general information only and does not constitute legal advice. Cross-lease terms and individual circumstances vary, and the application of court decisions will depend on the specific wording of the lease and the facts involved. Owners and purchasers should obtain independent legal advice before relying on this information or making decisions about alterations, consent, or disputes.