Frequently Asked Questions

A body corporate is a legal entity created when land is subdivided and registered to establish a unit title scheme. Every owner of a unit belongs to the body corporate, and they are jointly responsible for such aspects as the insurance and maintenance of the common areas. Click here for more…..

An accessory unit is an inseparable part of the principal unit, and often consist of carparks and storage lockers. Accessory units are intended to be used for a purpose that is ancillary to the principal unit to which it is attached. The accessory unit can be let under a monthly or weekly tenancy, but cannot be sold separate to the principal unit.

The Body Corporate charges an annual levy to cover the day-to-day expenses of the body corporate such as maintenance, insurance premiums, administration and utility charges for common services e.g. outdoor lighting. The levy is based upon an approved budget and is raised by either ownership or utility interest.

When a unit title development is created a valuer must assess the ownership interest for each unit, which is essentially the relative market value of that unit compared with all of the other units.
That utility interest is then used to calculate the share of levies paid. If a separate utility interest is not set by the body corporate, then the utility interest is the same as the ownership interest for the unit.

Utility Interest is the figure is used to raise other operating costs including any long-term maintenance fund or a contingency fund. In most complexes the Owner Interest and Utility Interest are the same.

The body corporate operational rules help the body corporate govern the unit title development. All unit owners, occupiers, tenants and the body corporate must follow the body corporate operational rules that apply to their development. The rules include things such as car parking, noise and rubbish collection etc.

The budgets forecast how much the body corporate expects to spend thru-out the financial year. How much each owner pays in body corporate levies depends on the budgets that the body corporate approves at the AGM. Once a budget is approved, it becomes the basis of the levies that you pay. The total payable in respect of each unit is calculated by applying either the ownership interest and/or utility interest to the total of each item in the budget.

The body corporate may establish and maintain one or more contingency funds to provide for unbudgeted expenditure.

A body corporate committee is made up of owners elected at an AGM to govern the body corporate. The body corporate may delegate some of its duties and powers to a committee; particularly duties that relate to the administration and management of the development. In order to be elected on to the body corporate committee, a person must be the owner of a principal unit, or a director or trustee if the unit is owned by a company or trust.

Common property are areas which are owned collectively by all the owners and these areas are the responsibility of the body corporate. The body corporate is responsible for repairing and maintaining the common property, any assets owned by the body corporate or designed for use in connection with the common property, and any building elements and infrastructure that relate to or serve more than one unit.

The body corporate may access any unit to carry out repairs and maintenance to common property, or to building elements and infrastructure which serve more than one unit. Access to units must be at reasonable times.

In accordance with the Unit Titles Act 2010, if you are selling your unit you are required to supply disclosure statements to the purchaser. Disclosure statements provide purchasers with information relevant to the complex so that they are fully informed before they purchase. There are three types of disclosure statements to provide potential unit title buyers with access to information to help make their decision.

1. Pre-Contract Disclosure Statement, which the seller provides to any potential purchaser before entering into an agreement for sale and purchase
2. Pre-Settlement Disclosure Statement, which the seller provides the purchaser after entering into an agreement for sale and purchase but before settlement of the sale
3. Additional Disclosure Statement, which the purchaser may request from the vendor at the purchaser’s cost

It is compulsory for a vendor to provide both the Pre-Contract Disclosure Statement and Pre-Settlement Disclosure Statement.

An EGM, is any General Meeting of the body corporate other than the Annual General Meeting. A body corporate can hold an EGM at any time throughout the year to consider any matter relating to the unit title development. For example, the body corporate chairperson or committee may need to hold an EGM to get agreement from the body corporate to undertake some additional repairs.

WHAT DOES THE LAW SAY:

A Body Corporate has a statutory duty to maintain insurance cover.

The Unit Titles Act, Section 136(1), requires a Body Corporate to “Insure and keep insured all buildings and other improvements on the land to their full insurable value”. Know more…..

The body corporate must establish and maintain a long-term maintenance plan, which covers at least 10 years. The long-term maintenance plan is normally funded by the long-term maintenance fund. It is compulsory to have a Long Term Maintenance Plan, it covers the common property, building elements, the infrastructure of the complex and any other additional items. It must include who prepared the plan, the period covered by the plan and the estimated age and life expectancy of each item covered by the plan. It needs to include whether there is a Long Term Maintenance Fund, and how much is put into the fund each year.

The body corporate must establish and maintain a long-term maintenance fund, unless the body corporate decides not to by special resolution. This fund can only be used for expenditure that relates to the long-term maintenance plan. The body corporate must approve any spending on a single maintenance item if the spending exceeds the budgeted amount in the long-term maintenance plan by more than 10%. The funds cannot be used for unexpected general maintenance matters. A body corporate can opt out of having a fund if agreed and passed by a special resolution, however it is compulsory to have a Long Term Maintenance Plan.

Private property is property which belongs to an individual unit and is the responsibility of the owner to maintain, unlike common property which is the responsibility of the body corporate.

A proxy provides written authority for someone else to attend and vote on behalf of any registered owner, at an Annual General Meeting or Extraordinary General Meeting.

A quorum, which is 25% of owners, is the percentage of owners that must be present or represented at a General Meeting of the body corporate to allow it to conduct business.

A special levy is a levy that is raised, in addition to the standard administration budget, for a special purpose, for example an unexpected large repair bill or remediation work.

A Special Resolution require a 75% majority of those owners present at a General Meeting entitled to vote that do vote to vote in favour of the motion. Special resolutions cover items of importance to the body corporate for example changing the Operational Rules.

A Trust Account is an account that is managed by one party for the benefit of another. The Trust account keeps each body corporate’s funds entirely separate from any other money.

The Unit Titles Act 2010 (UTA 2010) and Unit Titles Regulations 2011 provides unit title complexes with legislation which provides a legal framework for the ownership and management of unit title developments. The Act covers the creation and ownership of unit title developments, body corporate governance, the rights and obligations of the body corporate and individual unit owners, disclosure between buyers and sellers of unit titles, dispute resolution and a range of technical title and survey matters. The Unit Titles Regulations 2011 support the Act by setting out a handbook of operation guidelines.

The Unit Titles Act 2010 is to provide access to a cost-effective, appropriate and timely dispute-resolution process and enforcement regime for unit title disputes. MBIE aims to help people avoid and resolve disputes without needing to apply to the Tenancy Tribunal. Tools and information resources are provided by the Ministry to help the sector comply with the Act and its regulations.

The act allows for disputes to be heard in the Tenancy Tribunal, providing the amount claimed is not in excess $50,000.

The plan showing the lot, principal units, accessory units, common property, and unit entitlements. The unit plan determines what is common property and what is private. The Unit Plan is filed at Land Information New Zealand.