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