LawWorks News

Unit Titles Act 2010 - September 2011

A new Unit Titles Act came into effect on 20 June 2011. The new Act replaces the Unit Titles Act 1972.

One of the aims of the new law has been to assist unit title developments to adopt property governance and management regimes and to rectify what has been seen as the failure of unit title developments to adopt prudent maintenance and capital replacement plans and funds. 

The new law may also assist many New Zealanders to accept that a community of interest is not like "living in one’s own castle”.  There has become evident a need for those living in unit title developments to respect and understand the community environment that owners/occupiers have chosen to live or work in. 

It will be interesting to observe over time whether the new law which relates only to unit titles (not cross lease or corporate titles) achieves all of the goals which the legislators had in mind. 

What the new Act does achieve in short is the following:
  • Vesting of common property ownership in the body corporate and giving bodies corporate the ability to acquire additional common property and to create much more flexibility around easements and land covenants over common property;
  • Entrusting the body corporate with responsibility to carry out repairs beyond the common property, including repairs to principal units and accessory units where the structural integrity of the unit title development is put at risk;
  • An adoption of a reasonably comprehensive disclosure regime by developers and sellers of units, which will need some considerable fine tuning to make it work;
  • The adoption of a much needed disputes regime which will see the introduction of the Tenancy Tribunal and District Court being involved;
  • The strengthening of the governance regime placing clear responsibilities on chairpersons and body corporate committees and providing for much improved financial management; 
  • The entrenchment of body corporate rules in the new Act;
  • Introduction of layered developments: (complex structures of unit title enabling staged and tiered developments); 
  • Adoption of ownership and utility interests providing an opportunity to achieve a more fair basis for charging levies to owners. 
The leaky building syndrome in New Zealand has done much to highlight the deficiencies in the old 1972 Act, particularly over the demarcation between common property and principal and accessory units, and the consequential responsibilities for repair and difficulties over deciding who pays.  Although the new Act has made a bold attempt to address the demarcation issue the contest of who pays remains. 

For our clients either buying or selling a property that is a unit title, it will be important that they seek our advice before entering into any contract for sale and purchase. For sellers, it is critical that they comply with the disclosure provisions contained in the new Act requiring sellers to make certain disclosures to purchasers.  For purchasers it will be important that any contract to purchase contains conditions to protect them and that they properly review and understand the disclosure information that they are now entitled to receive to ensure that they are "educated” in full about the property, the complex of which it forms part and the body corporate itself. 

<< Back to News