What is the Difference Between Unit Titles, Residents Societies, and Cross Leases?

Read Time: 4 Minutes   

Unit titles (strata titles) involve owning a specific unit and a share of common areas, managed by a body corporate; cross-leases involve owning a share of the freehold land and a leasehold interest in a specific dwelling; residents societies (or associations) manage common areas and infrastructure in developments using fee simple titles, and are a newer concept compared to body corporates. We take a closer look. 

What is a Unit Title? 

A unit title is a form of property ownership where individuals own a specific unit, such as an apartment or townhouse, within a larger complex or building, along with a share of the common areas, like hallways, gardens, or carparks. These common areas are collectively owned by all unit title holders, and their management and maintenance are handled by a body corporate, made up of all unit owners. 

A body corporate is a legal entity made up of all the owners within a unit-titled property. Owning a unit or apartment in a complex automatically makes you a member of your property’s body corporate, which gives you a say in the daily running and maintenance of the body corporate. You also have a say in any financial obligations to which you are required to contribute. 

Read more: All You Need To Know About Unit-Titled Properties. 

What is a Residents Society? 

Residents societies (also known as incorporated societies) are common in townhouse developments and new subdivisions. These societies are responsible for managing the upkeep of shared infrastructure, including parks, roads, stormwater systems, and sewage treatment. Unlike a body corporate, a residents society usually applies to freehold properties, where the owners own both the land and their individual homes. 

Residents societies often manage common areas but leave property owners responsible for their own properties. While a body corporate has legal obligations under the Unit Titles Act, residents societies are governed by the Incorporated Societies Act. 

Read all about incorporated societies and find how incorporated societies can register under the new act. 

What is the Difference Between a Residents Society and a Residents Association? 

A residents association is similar to a residents society but tends to have a more formal governance structure. A residents association is typically formed to represent the collective interests of residents in a neighbourhood or development. The association may advocate on behalf of residents for local issues such as zoning, infrastructure, or safety concerns. 

While a residents society is usually tied to the maintenance of common areas, a residents association often focuses more on social, community, or advocacy matters. In some cases, the terms residents society and residents association are used interchangeably, but the association is often less involved in property maintenance. 

What is a Cross Lease? 

Cross leases are typically used for townhouses or homes built on subdivided land. In a cross lease, individual owners lease the land from each other and share certain responsibilities for the upkeep of the property. While the land itself is not owned outright by the residents, the leasehold agreements give them exclusive rights over their own properties. 

Cross leases are relatively common in New Zealand, but it’s a good idea to understand exactly what you’re getting into before you buy a cross-leased property. 

How are Residents Societies, Residents Associations, and Body Corporates Different? 

The primary difference between residents societies, residents associations, and body corporates is in ownership and legal responsibilities. Each structure has its own set of obligations, and the legal framework varies depending on the type of ownership involved. 

Why are Residents Societies and Residents Associations Becoming More Common? 

With the increase in urban density and new residential subdivisions, the need for residents societies and residents associations has grown. As city councils face challenges with taking ownership of infrastructure like private roads and small parks, these societies help ensure that the maintenance of shared spaces is taken care of. 

How Can Crockers Help Manage Your Body Corporate or Society? 

Crockers is New Zealand’s largest body corporate and society administration manager. We have the largest body corporate office in the country, managing 20,000 units across almost 1000 body corporates. As your Body Corporate Manager, our job is to make your life easier by taking care of the administrative functions of your body corporate on behalf of the Body Corporate Chairperson and/or Committee.  

Crockers works with societies too. Larger societies often engage a professional management company such as Crockers to work with an elected committee to help administer the members’ register, file annual returns, hold Annual General Meetings, and complete other tasks as are required under their Constitution.  

FAQs 

1. What's the main difference between a body corporate and a residents society?
   A body corporate manages shared areas in unit-titled properties (like apartments). A residents society manages shared infrastructure (like roads) in freehold developments where you own your land.
   
   
2. What is a cross lease, and how is it different from a unit title?
   With a cross lease, you lease your land from others. With a unit title, you own your specific unit (like an apartment) and share common areas.
   
   
3. Are residents associations the same as residents societies?
   Not exactly. Residents societies usually manage shared property upkeep. Residents associations often focus more on representing residents' interests on local issues. 
   
   

Not a Crockers Body Corporate client yet? Get in touch with our friendly BC Business Development team at  09 968 3311 or email  bc@crockers.co.nz, and they'll be happy to help.