Changes to the Unit Titles Act

By - , Build 190

A new piece of legislation has made its way through Parliament that puts in place changes to the Unit Titles Act.

THE UNIT TITLES (Strengthening Body Corporate Governance and Other Matters) Amendment Act was crafted against the background of New Zealand’s changing housing landscape.

Amendment Act has several purposes

The general purposes of the Amendment Act are to:

  • improve the information disclosure regime to prospective purchasers of unit-titled properties
  • strengthen body corporate governance arrangements
  • increase standards for body corporate managers
  • ensure that unit title developments are adequately planned for and funded, including long-term maintenance projects
  • strengthen dispute resolution processes by creating a better system for legal costs.

It also tidied up other problem or ambiguous areas in the Act.

The exact date the Amendment Act comes into effect will be determined by Orders of Council, which at the time of writing have not been issued. If no Orders are issued, this will be 2 years after the date of Royal Assent – on 9 May 2024.

Changes to the disclosure regime

Additional information will now need to be provided by the body corporate in the precontract disclosure statement, including:

  • whether the body corporate or body corporate committee has actual knowledge that any part of the unit title development has:
    • weathertightness issues for which a claim has been made under the Weathertight Homes Resolution Act 2006
    • weathertightness issues that have been remediated without a claim under that Act or other proceedings before a court or tribunal
    • weathertightness issues that have not been remediated
    • earthquake-prone issues
  • any other significant defects in the land – including the unit title development and the land on which it is situated – that may require remediation
  • whether the body corporate is involved in any proceedings in any court or tribunal and, if so, details of the proceedings
  • financial statements and audit reports for the previous 3 years or (as the case may be) audit reports for those of the previous 3 years for which an audit was carried out and a statement of the years in that period for which no audit was carried out
  • notices and minutes of general meetings of the body corporate and the body corporate committee for the previous 3 years, including all supporting documentation but excluding any information that may be redacted in accordance with the Regulations
  • the name and contact details of the body corporate manager or managers
  • the 12-month period comprising the current financial year for the purposes of the financial statements of the body corporate
  • the body corporate levies payable for the unit for the current financial year
  • details of maintenance that the body corporate proposes to carry out on the unit title development in the year following the date of the disclosure statement and how the body corporate proposes to meet the cost of that maintenance
  • the balance of every fund or bank account held or operated by or on behalf of the body corporate at the date of the last financial statement
  • a copy of the long-term maintenance plan
  • any proposed works under the long-term maintenance plan for the unit title development to be carried out or begun within the next 3 years and the estimated costs of the works
  • the next review date for the long-term maintenance plan for the unit title development
  • any remediation reports commissioned by the body corporate within the previous 3 years
  • a summary of the insurance cover the body corporate maintains for the unit title development, including the insurer’s name and contact details and the type and amount of cover, the annual amount payable for it and the excess payable on any claim under it as well as any specific exclusions from cover, and a statement of where and how the insurance policy can be viewed
  • an explanation of the unit title property ownership, unit plans, ownership and utility interests, body corporate operational rules, the information required to be contained in a presettlement disclosure statement, records of title, the land information memorandum issued under s44A of the Local Government Official Meetings Act 1987 and easements and covenants.

Committees and meetings

The Amendment Act will allow bodies corporate to conduct meetings by audio or audiovisual link.

Under the previous law, this had been allowed on a temporary basis during the COVID-19 pandemic, but the Amendment Act establishes this as a permanent option. Voting will also be able to be done electronically.

This will be useful for bodies corporate that have members residing overseas to encourage their participation in meetings.

Body corporate managers

The Amendment Act imposes obligations on body corporate managers, who are not mentioned in the previous law and did not have any regulations governing them.

This includes a new code of conduct for body corporate managers as well as requirements to disclose any conflicts of interest. The new code of conduct will be located in Schedule 1A of the Unit Title Regulations 2011.

Large developments

The Amendment Act has provisions relating to large developments. This term refers to unit title developments including at least 10 principal units.

Under the Amendment Act, the body corporate for a large residential developments must:

  • have a body corporate manager
  • have a long-term maintenance plan for a 30-year period that is reviewed every 3 years or reviewed earlier if the body corporate becomes aware of something that affects the long-term maintenance plan
  • have its long-term maintenance plan peer reviewed by a building professional.

Dispute resolution processes

The Amendment Act provides that fees for unit title disputes in the Tenancy Tribunal will be reduced to:

  • $250 for an application referred to a tenancy mediator
  • $500 for an application referred to adjudication.

These changes abolish the current Category 1 and Category 2 proceedings regime, making access to the Tribunal more achievable as the current fees were sometimes prohibitive to owners or other parties taking any action. The Amendment Act also increases the threshold for unit title disputes that can be heard by the Tenancy Tribunal from $50,000 to $100,000.

Next steps

It is important for all bodies corporate and their advisors to be aware of and comply with the new requirements.

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Articles are correct at the time of publication but may have since become outdated.

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