BODY CORPORATE
The new Unit Titles Act - how does it affect me?
The Unit Titles Act 2010 (UTA 2010) became law on 20 June
2011. Fortunately, not everything will change immediately, as
owners in unit title properties require time to work out what the
changes mean for them and the running of their property.
Below is a list of answers to frequently asked questions about the
new Act and our own UTA 2010 Quick Guide, which breaks down 6 core
points you need to know about.
Where applicable we will attach links to the relevant section
of the Act for your information.
To review the full Act please click here.
Crockers Unit Titles Act 2010 Quick Guide
We have read through all the 'heavy' stuff and have provided you
with this quick guide, outlining 6 main points which you need
to be aware of in a body corporate. Click here for eBook.
Body Corporate Rules
Q: Do our current Rules still work for us?
A: Yes - although there are
exceptions. While the UTA 2010 and the Regulations take
effect from the date of implementation (being the 20th June 2011),
the current Section 37 of the Unit Titles Act 1972 (UTA 1972) and
Schedule 2 & 3 Rules (your Body Corporate Rules) stay in effect
for the next 15 months, unless your Body Corporate agrees by
Special Resolution to adopt sections 105 and 138 of the UTA 2010.
This is to allow each Body Corporate some transition time to
understand the changes, especially to quorums, voting and
governance matters that are now the same for every body
corporate. However, if there are any conflicts between
your existing rules and the Act, then the Act prevails. The
Operation Rules, (similar to your current schedule 3 rules) will be
able to be reviewed and adopted, or amended as required by your
complex.
For more information click here.
Q: Do we have new 'Rules'?
A: All current rules will still
apply during the 15 months transition period. However,
if there are any conflicts between your existing rules and the Act,
then the Act prevails.
For more information click here.
Ownership Interest
Q: What is this and what happened to my
Unit Entitlement?
A: Ownership interest is the same as Unit
Entitlement from the day the new Act comes into effect. You do not
need to do anything, this happens automatically. This is the
figure used to raise the funds to pay insurance, ground rent (if it
affects you) and the funds for the Long Term Maintenance
Plan.
For more information click here.
Q: Can it be changed?
A: Yes it can - but it must be done by a
registered valuer, and is based on the relative value of your unit
when compared to others in your body corporate. This is the same
method by which your current Unit Entitlement was calculated. The
owners at a General Meeting need to pass a Special Resolution
(requiring 75% support) to do this.
Unless there has been some significant change to units within your
complex, this is not an issue that will require immediate
attention.
Should any changes be made, there can be no further review for
another 36 months, so this isn't something that has to be agreed
each year!
Like Unit Entitlement, it is unlikely that there will be need to
review and change the Ownership Interest.
For more information click here.
Utility Interest
Q: What is this? Why is it
different from Ownership Interest?
A: Utility Interest is the same as your
current Unit Entitlement from the day the new Act comes into
effect. Again, you do not need to do anything, this happens
automatically. It is the figure used to raise the other costs
associated with your complex, apart from the ones that are raised
by Ownership Interest. In many complexes these two Interests
will be the same as the current Unit Entitlement, and will not need
to be reviewed immediately.
For more information click here.
Q: Can it be changed?
A: Yes it can - however, unlike Ownership
Interest the members of the Body Corporate make the decision on
this and can change it. Again it has to be agreed by Special
Resolution (75%) at a General Meeting, needs to be fair &
equitable, and once agreed lodged in the correct format at Land
Information New Zealand (LINZ). While it sounds simple, for
mixed use and larger complexes this may require professional
input.
Like Ownership interest, should Utility Interest be changed there
can be no further review for another 36 months.
For more information click here.
Long Term Maintenance Plan
Q: What is this? Does the Body
Corporate have to have it? What does it have to include?
A: Yes, every Body Corporate must
have a Long Term Maintenance Plan, the format of this is prescribed
in the Regulations, and your Account Manager will discuss this with
you at the next Annual General Meeting.
The Body Corporate cannot decide not to have this. The Act
sets out that the plan must cover:
• the common property;
• the building elements;
• the infrastructure of the unit title development; and
• any additional items that the body corporate has decided by
ordinary resolution to include in the plan
It must also:
(a) state the period covered by the plan;
(b) state the estimated age and life expectancy of each item
covered by the plan;
(c) state the estimated cost of maintenance and replacement of each
item covered by the plan;
(d) state whether there is a long-term maintenance fund;
(e) if there is a long-term maintenance fund, state the amount
determined by the body corporate to be applied to maintain the fund
each year; and
(f) state who has prepared the plan
For more information click here.
Long Term Maintenance Fund
Q: What is this? Does the Body Corporate
have to have it? What does it have to allow for?
A: Your complex may already have a
'sinking fund'. This is often money set aside for the long
term maintenance requirements of your complex, so it is likely that
you may already have this fund.
It is a requirement, but unlike the Plan, the Body Corporate
strangely can opt out of having a Fund. It does, however, need to
be passed by Special Resolution at a General Meeting. Apart from
some small complex, it would be extremely unusual not to have a
fund for this, as prospective purchasers take into account whether
bodies corporate are appropriately funded.
For more information click here.
Disclosure Requirements
Q: What information do I have to provide
if I plan on selling my unit?
A: Under the UTA 2010, sellers are required
to provide a lot more information to prospective purchasers.
The information contained in the disclosure statements is intended
to help provide buyers with information that can assist in their
purchase decision. The Act provides for three types of
disclosure:
Pre-contract disclosure statement -
which the seller provides before an agreement for sale and
purchase can be entered into.
Pre-settlement disclosure
statement - which the seller provides after entering
the agreement for sale and purchase but before settlement of the
sale.
Additional disclosure - which
the seller provides on request of the buyer.
The first two disclosure statements are mandatory requirements and
cannot be contracted out of. The additional disclosure
statement, meanwhile, is at the discretion of the purchaser whether
they feel that it is necessary.
For more information click here
Disputes
Q: What should I do if I have a
dispute?
A: In our experience, most situations can be
resolved by discussion with the person/people involved.
However, if this proves not to be the case, the UTA 2010 provides
for disputes to be heard in the Tenancy Tribunal (so long as the amount
involved does not exceed $50,000, and the matter does not concern
allocation of insurance monies or is an issue of title). The
fee to lodge the dispute will be either $850
or $3,300 depending on the complexity.
For more information on Residential Tenancies (Unit Title Disputes)
Rules 2011, click here.