Amendments required to the Unit Titles Act 2010

Posted by Auckland Property Management Ltd on February 12, 2020 | Body Corporate, Company News, News

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Steve Garland, General Manager for our Body Corporate division discusses how amendments are needed to the Unit Titles Act 2010

Momentum is building to reform the law around the Unit Titles Act 2010. Recently a petition was launched which Auckland Property Management supported, calling on the Government to urgently act and amend the Unit Titles Act 2010. This followed the Unit Titles Amendment Bill that Judith Collins and Nikki Kaye championed in 2018.

That amendment bill basically aimed to:

  • Improve the disclosure regime
  • Increase professionalism and standards of Body Corporate Managers
  • Improve the Long Term Maintenance planning and funding process as well as
  • Generally closing any gaps around Body Corporate Governance.

 

As a founding member of Strata Community Association NZ (SCA) in which we have Senior Body Corporate Manager Lisa Mak representing APM on the SCA Executive, and as a member of the Body Corporate Chairs Group (BCCG), we believe in best practice both here at APM and throughout the industry.  So let’s take a quick look at the main areas that have been identified as needing improvement.

The Disclosure Regime certainly could be improved markedly in our view. The key in lieu of any legislative changes in the near future is to be totally transparent and timely with the information provided. Conveyancing Solicitors also have a vital role to play and should demonstrate that they have their client’s best interests at hand by asking ALL the right questions in the disclosure process for existing Bodies Corporate. At a minimum this would include but not be limited to three (3) years of Annual and/or Extraordinary General Minutes, a copy of the Body Corporate Rules and a copy of the Long Term Maintenance Plan. For new developments and off the plan purchases’ it’s a slightly different ball game so purchasers should only use lawyers well versed in Unit Titles conveyancing.

In terms of improving the Long Term Maintenance Planning and funding process we are pleased to report that the majority of our clients already have this in hand and under administrative control. Bodies Corporate and their Committees have now had around three cycles in which the Body Corporate would have formally had to review their Plans – required every three (3) years as noted under Regulation 30(2) – since the Unit Titles Act 2010 came into force. Those that don’t are basically just underfunded but happy to raise a special levy if required. For more on APM’s thoughts on the LTMP regime check out our October 2019 article Long Term Maintenance Plans – How Robust Is Yours?

Currently a Body Corporate Manager or management company has no statutory obligation under the 2010 Act. Their obligations are solely those of a service contractor to the Body Corporate, under a service agreement. The proposed Unit Titles Amendment Bill noted that there is a lack of a publicly searchable register for Body Corporate Managers, a lack of regulatory regime, a lack of a compulsory code of conduct and a lack of method by which poor, dishonest or unsuitable Body Corporate Managers can be removed from the industry.

APM totally supports increased professionalism and standards of Body Corporate Managers and Body Corporate Management companies as this will only enhance services and experiences that benefit the Body Corporate owner. For instance, having client accessible financial communication channels, operating Trust accounts, belonging to industry bodies, breadth of Account Manager experience and depth of team and management are all favourable features of a successful, professional management company.

In terms of governance, this is a bit of a mind field because the Unit Titles Act has so many areas in which things could be improved. Proxy farming, unfair contracts entered into by the Body Corporate when under developer control, complicated rights and obligations and conflicts of interest easily spring to mind.

But who really knows when legislative change will occur. It took 38 years before the current Act replaced the initial 1972 version and the current version is only ten years old so it will be interesting to see if the current momentum will be sustained into meaningful law reform any time soon.

Kind regards

Steven Garland

General Manager – Body Corporate
Auckland Property Management

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