What is a cross lease?

A cross lease is where a number of people own an undivided share in a piece of land and the homes that they build on the land are leased from the other land-owners (normally for a term of 999 years). The houses are usually flats or townhouses. When you are making major structural changes to your property or making changes that could affect the flats plan on the certificate of title, then as well as approaching the local authority, you’ll need the other owners in the cross lease to provide their written approval.  The decision making process around common area (access, outdoor amenity areas etc) must be made in consultation with the other owners and all must be in agreement.

 

What does it mean if the arbitration clause in the cross-lease agreement provides for the dispute to be referred to the arbitration of two or more arbitrators and their umpire?

This results in a three-person arbitral tribunal with the parties then paying for three decision-makers.

Despite this, it remains open to the parties to agree on a sole arbitrator. Any person appointed as an arbitrator must act independently.

You will need to advise that the appointment is made pursuant to clause 26 (check as the clause number is missing on our copy)  of the cross lease agreement and invite the counter party to either agree to your appointee acting as a sole arbitrator or to make its appointment pursuant to the agreement within seven days.

If the counter party makes an appointment the two party appointed arbitrators will then need to appoint a third presiding arbitrator.

 

What happens if the counter party ignores your notice – serve Notice of Default

If the counter party does not make an appointment within seven days you will then need to serve a Notice of Default in terms of clause 1(4), 2nd Sch, Arbitration Act 1996 specifying that if the default (the failure to appoint an arbitrator) is not remedied within seven days of receipt of the notice, the arbitral tribunal will consist only of your appointee.

You will then need to wait the seven days. If there is no response you can then issue a Notice confirming the composition of the arbitral tribunal and invite the arbitrator to engage on the duties of the matter.

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