As a Unit Title owner and a member of a Body Corporate, you must ensure you read and understand your rights and responsibilities under the Unit Title Act 2010.
What is a unit title?
Unit Titles are the most widely used form of multi-unit property ownership and are regulated by the Unit Titles Act 2010. Unit title developments are typically apartment blocks, units, townhouses, office blocks and industrial or retail complexes.
In a unit title development, owners own a defined part of the building, such as an apartment or unit, and may also have shared ownership in common areas such as lifts, lobbies or driveways. Collectively, all the unit owners in a unit title development make up the body corporate. The body corporate is responsible for a range of management, financial and administrative matters relating to the common property and to the building as a whole.
What is the body corporate?
The body corporate is an entity made up of all the unit owners in a unit title development – if you are a unit owner, then you are a member of the body corporate.
A body corporate is automatically created by the Unit Titles Act 2010 when a unit title development is created (specifically, when the unit plan for the development is deposited with Land Information New Zealand). This is usually done by the developer – a body corporate does not need to do anything else to register its existence.
Every unit title development has a body corporate, whether or not the body corporate is functional. If you don’t have a functional body corporate, you can find some tips on getting things up and running below.
Bodies corporate have “perpetual succession”, meaning they have their own identity and continue to exist despite changes in membership. When a unit owner sells their unit they are no longer a member of the body corporate, and the new unit owner becomes a member of the body corporate.
Professionals such as building managers and body corporate managers are not members of the body corporate, but they can be engaged to carry out some of the body corporate’s responsibilities and Unit Titles Act 2010 obligations on its behalf. You can find out more about building managers and body corporate managers below.
What does the body corporate do?
A body corporate is not the same as other corporations, such as companies or incorporated societies. It is a “creature of statute”, meaning a body corporate only exists because of the Unit Titles Act 2010. The ability for a body corporate to act and the limits on its actions are set by statute.
The body corporate is responsible for a range of management, financial and administrative functions relating to the common property and to the development as a whole. These functions mainly relate to the things all unit owners have a shared interest in – land, money, other property – which is why all unit owners are members of the body corporate.
The Act sets out some key powers and duties of the body corporate, including:
- Owning the common property
- Managing, maintaining and repairing the common property, including common building elements and infrastructure that might not be common property
- Establishing and maintaining a long-term maintenance plan
- Keeping and maintaining a register of all unit owners
- Calling general meetings of the body corporate
- Keeping accurate financial statements
- Insuring the development
- Levying contributions on owners to fund the operation of the body corporate
- Providing documents to unit owners, such as financial statements, meeting minutes and insurance details
- Enforcing the body corporate operational rules.
A body corporate can delegate some of its powers and duties to a body corporate committee.
Click here to find out how we can help you with your body corporate obligations
Getting a body corporate up and running
If you are in a new development, there are some things you need to know about your obligations under the Unit Titles Act 2010 to get the body corporate up and running:
- The body corporate must have its first annual general meeting as soon as possible and not more than 6 months after the date the unit plan was deposited or the first unit was sold
- At the first annual general meeting the body corporate needs to elect a chairperson
- At the first annual general meeting the body corporate should also decide whether they need a body corporate committee
- When developer has sold enough units that they no longer have control over the development, they must give the body corporate notice of that fact and call a meeting. At that meeting, the developer must provide the body corporate with a turn-over disclosure statement and disclose any interest they have in contracts made by the body corporate.
If you are in an established development but the body corporate is not operational or performing the functions required by the Unit Titles Act 2010 you could:
- Talk to the other unit owners and ask how they think the body corporate should be run
- Talk to other people you know who are members of a body corporate in another development
- Establish an annual social event to discuss any body corporate matters; such as property maintenance, insurance or finances
- Think about engaging a professional body corporate manager
There are a number of different professionals that provide services to bodies corporate. They are not members of the body corporate, rather, they are contracted to provide specific services.
Professional body corporate managers are one of the most common service providers to bodies corporate in New Zealand. They tend to do many of the administrative tasks on behalf of the body corporate, such as organising meetings, preparing financial statements and collecting levies.
Some developments, particularly mixed-use developments that have hotel or serviced apartment units, have building managers. The role of building managers varies. In some cases they are responsible for running the hotel or serviced apartments.
In other cases they organise repairs and maintenance of the building. Sometimes they might provide porter or reception services. The body corporate is usually responsible for paying the building manager.
Maintenance Planning Specialists
Bodies corporate are required to establish and maintain a long-term maintenance plan. Some bodies corporate might consider engaging a specialist to create the plan and update it regularly, especially if you have a large development with a lot of common property.
Many long-term maintenance specialists will provide advice on what the plan should cover, when maintenance needs to be undertaken on different parts of the building and how much it is likely to cost. Some long-term maintenance specialists will also provide advice on how much you should save to pay for maintenance in the future.
Things to consider when engaging a service provider
Regardless of what kind of service provider you are thinking about engaging, you should:
Check references. Some service providers are better than others. Find out what kind of experiences other people have had with their service provider, and ask for references.
Decide on exactly what you want a service provider to do and put it in a contract. You might want to consider having a lawyer look over the contract for you. Don’t let a service provider try to write their role into the body corporate rules and think twice about contracting with someone who tries this: you have more consumer protection if you have a contract.
Click here to talk with us for a more in-depth guide to the Unit Titles Act 2010
What can the body corporate do about a service contract entered into by a developer?
Sometimes a developer will commit the body corporate to a contract with a service provider.
If the developer enters into a contract with a service provider that the body corporate has to honour, they must exercise reasonable skill, care and diligence and act in the best interests of the body corporate in ensuring that:
- the terms of the contract achieve a fair and reasonable balance between the body corporate and the service provider
- the terms of the contract are appropriate for the development
- the powers and duties of the service provider are appropriate for the development and do not adversely affect the body corporate’s ability to carry out its functions.
If you are in the situation where the developer has entered into a contract on behalf of the body corporate and you think the contract is not fair, you can apply to the Tenancy Tribunal, District Court or High Court (depending on the value of the dispute) for an order:
- requiring the developer to pay the body corporate compensation for any loss or damage
- terminating the contract on the grounds it is “harsh or unconscionable.”
You should consider taking independent legal advice before making either of the above applications.
Click here to find out how we can help you with your body corporate obligations
What elections are needed?
In accordance with the Unit Titles Act 2010, your body corporate must hold elections at each Annual General Meeting (AGM) for the following positions:
Election of a body corporate chairperson. Because the body corporate chairperson’s term in office ends at the close of each AGM (unless they resign or are removed earlier), the body corporate must elect a chairperson by ordinary resolution at every annual general meeting. Even if your body corporate already has a chairperson, the members must elect a new one or re-elect the current one.
Election of body corporate committee members. If your body corporate has a committee, the committee members’ terms of office will also end at the close each AGM. As with the body corporate chairperson, even if your body corporate already has committee members, you must elect new ones or re-elect the current ones.
Election of a subsidiary body corporate representative. If your body corporate is a subsidiary body corporate, elections must also be held at the AGM for a subsidiary body corporate representative. The subsidiary body corporate representative’s term in office is the same as the chairperson’s, ending at the close of each AGM. Even if your body corporate already has a subsidiary body corporate representative, you must elect a new one or re-elect the current one.
What are the responsibilities of a body corporate chairperson?
According to the Unit Titles Act 2010 the chairperson must:
- maintain the register of unit owners
- prepare the agenda for each general meeting
- chair each general meeting (unless it is agreed at the start of a general meeting that another person will chair that meeting)
- prepare minutes of each general meeting
- record resolutions voted on and whether they were passed
- keep financial accounts and records
- submit the body corporate’s financial statements to an independent auditor
- receive reports from the body corporate committee and distribute them to unit owners
- sign documents on behalf of the body corporate
- prepare and issue notices of resolutions to be passed without a general meeting
- notify unit owners of the result of any vote on a resolution to be passed without a general meeting
- notify the body corporate committee of any delegation of a duty or power under the Unit Titles Act 2010 by the body corporate to the body corporate committee
- undertake any other duties relating to the administration of the body corporate that the body corporate has decided by ordinary resolution to confer on the chairperson.
- The body corporate could delegate some or all of these tasks to the body corporate committee, if there is one.
The body corporate could delegate some or all of these tasks to the body corporate committee, if there is one.
The body corporate could also decide to contract a professional body corporate manager to do some or all of these tasks (as well as any other tasks that may need to be done). If your body corporate wants to enter into such an arrangement it is important for it to be clear in the contract what exactly the professional body corporate manager is contracted to do.
79 Rights of owners of principal units
An owner of a principal unit—
- has all the rights derived from being registered as the owner of the stratum estate in a unit under this Act:
- holds a share in the common property in accordance with section 54(2):
- is entitled as a body corporate member to exercise a vote in respect of his or her unit, subject to section 96 and any other requirements in the regulations:
- is entitled to have quiet enjoyment of his or her unit without interruption by other unit owners or occupiers, or the body corporate or its agents, except as authorised by this Act or the regulations:
- subject to section 80(1)(h) and (i), may make any alterations, additions, or improvements to his or her unit so long as these are within the unit boundary and do not materially affect any other unit or common property:
- has the right to have any dispute resolved in the manner set out in subpart 1 of Part 4:
- has the right to enforce the body corporate operational rules:
- has the right to attend the general meetings of the body corporate.
80 Responsibilities of owners of principal units
An owner of a principal unit—
- must permit the body corporate (or its agents) to enter the unit at any time in an emergency and at all reasonable hours, and after giving reasonable notice, for any of the following purposes:
- to view the condition of the unit for the purpose of ascertaining compliance with the principal unit owners’ or occupiers’ obligations under this Act:
- to maintain, repair, or renew any infrastructure for services and utilities that serve more than 1 unit and any building elements that affect more than 1 unit or the common property, or both:
- to maintain, repair, or renew any common property:
- to ensure the body corporate operational rules are being complied with:
- must do all things necessary to give effect to decisions of the body corporate:
- must consult with his or her mortgagee, if required to do so, before exercising a vote under section 97 or 98:
- must comply with all laws and legal requirements relating to the use, occupation, or enjoyment of the unit:
- must carry out, without delay, all work that may be ordered by a territorial authority or public body in respect of the unit to the satisfaction of that authority or body:
- must pay all rates, taxes, charges, body corporate levies, and other outgoings that are from time to time payable in respect of the unit:
- must repair and maintain the unit and keep it in good order to ensure that no damage or harm, whether physical, economic, or otherwise, is, or has the potential to be, caused to the common property, any building element, any infrastructure, or any other unit in the building:
- must notify the body corporate of his or her intention to carry out any additions or structural alterations before the commencement of any work:
- must not make any additions or structural alterations to the unit that materially affect any other unit or the common property without the written consent of the body corporate:
- must comply with the body corporate operational rules:
- must not do anything that breaches or in any way undermines any policy of insurance in the name of the body corporate.
81 Responsibilities of absent owner of unit who leases or licenses unit
This section applies to owners of units who lease or license their unit, and who are absent from New Zealand for longer than 3 consecutive weeks.
- An owner of a unit to whom this section applies must—
- appoint a person in New Zealand to act as his or her agent unless the lease is in respect of a residential tenancy under the Residential Tenancies Act 1986 and an agent has already been appointed under that Act; and
- advise the body corporate of the agent’s name, address for service, and contact details.
- A person appointed as an agent under subsection (2) or the Residential Tenancies Act 1986 has the power to enforce the body corporate operational rules.
- If an owner of a unit does not appoint an agent or the agent fails or refuses to enforce the body corporate operational rules, the body corporate may enforce those rules.
85 Register of unit owners
A body corporate must keep and maintain a register of all owners of principal units and accessory units on the unit plan in accordance with the regulations.
- The owner of a principal unit must notify the body corporate in writing of any changes to the information held in the register that relates to his or her unit.
- Despite anything in this Act, where the owner of a principal unit transfers his or her unit to any other person until the body corporate is notified in writing of the transfer,—
- that owner of the principal unit remains liable to the body corporate for all contributions levied by the body corporate under section 121 for his or her unit.
- the transferee is only entitled to exercise the voting rights for the unit at a general meeting with the consent of the other owners of principal units who are present at the meeting.