Unit Titles (Strengthening Body Corporate Governance and Other Matters) Amendment Act 2022

In response to the need for more houses in New Zealand and as a result of newly introduced legislation which will allow for the faster creation of high-density housing, we are likely to see a greater number of people living in unit title developments. While this will undoubtably change the landscape we are used to living in, it also places a spotlight on how people buy into apartment blocks, get the right information, interact with their fellow unit title owners, make decisions, and live together.

After a long wait since it was first raised that changes in legislation surrounding unit titles were needed the Unit Titles (Strengthening Body Corporate Governance and Other Matters) Amendment Act 2022 (Body Corporate Amendments) brings a suite of changes to the Unit Titles Act 2010.  If you are part of a body corporate committee, a manager, owner or person thinking about buying an apartment, you should be aware of the new sections which received Royal Assent on 9 May 2022.  While the date of effect of the Body Corporate Amendments is yet to be set, it has been announced that all new sections must be in force by no later than 9 May 2024.  This article summarises the new sections.

Summary of New Sections

For Body Corporate Committees

• Members can attend committee meetings by audio-visual means (s 88)
• A proxy may call a poll (s 99)
• Certain body corporate operational rules cannot be delegated (s 108)
• The body corporate chairperson and committee chairperson are the same person (s 112A)
• A committee must have an agenda for each meeting and must keep written records of meetings and decisions (s 113)
• Committee members must comply with a code of conduct (a new requirement under the Body Corporate Amendments) and keep a conflict of interest register (ss 114A-F)
• If a body corporate has decided not to establish a long-term maintenance fund, this decision must be reviewed annually

For Body Corporate Managers 

• A ‘body corporate manager’ is defined as a person employed or engaged to undertake record-keeping, financial and/or regulatory compliance services
• A body corporate must keep records in order to provide required disclosure information (s 84)
• The duty to maintain committee meeting minutes under s 113 falls to the body corporate manager
• Each manager must:
  • Have a written agreement
  • Disclose any conflicts of interest
  • Comply with their own code of conduct (ss 114G-J)
• Large unit title developments (10 or more units) must have a body corporate manager (unless vetoed by special resolution)
• Large unit title developments must have a long-term maintenance plan
• The Tenancy Tribunal can make pecuniary penalty orders where a body corporate manager has intentionally and unreasonably breached certain duties. A body corporate may also be subject to such an order in some instances (ss 176A-D)
• MBIE can require copies of 39 documents or inspect a unit title development with widened powers (ss 202A-F)

For Owners

• A utility interest can now be a single interest or a multiple set of interests (s 39(2B))
• The extent of unit owners’ rights and responsibilities are clarified in (ss 79-80)
• Owners can attend committee meetings by audio-visual means (s 88)
• “A pay up to vote” provision mean owners must have paid their levies in order to vote (s 95)
• A vote can be in person, by proxy or electronically (ss 102 and 103A)
• The original owner’s obligations in relation to service contracts have been recast and extended to signage agreements, such that 24+ month contracts are subject to compliance requirements (s 139)
• Selling or buying: Pre-contract and pre-settlement disclosure is retained, and the information required to be provided expanded, but additional disclosure has been removed. Matters include:
  • A purchaser can delay settlement or cancel if pre-contract disclosure is not properly provided, (although notice and an opportunity to remedy must be given before these rights are exercised)
  • Cancelling the sale and purchase agreement on the grounds of disclosure is limited to where the information is incomplete or incorrect and it therefore substantially reduces the benefit or increases the burden on the buyer (ss 146, 149, and 149A);
  • Settlement may be delayed, or the agreement cancelled following notice and an opportunity for the seller to remedy the failure to properly disclose (ss 151-151A)
• The jurisdiction of the Tenancy Tribunal has been increased to $100,000, and legal costs have been better provided for. This makes it more worthwhile to engage lawyers and present matters through the Tenancy Tribunal.

Comment

The Body Corporate Amendments help clarify what information prospective purchasers are getting and how, once they are owners, they are to work with their fellow body corporate members.  While a big step in the right direction as far as strengthening the rules, we expect that once in force there will still be issues that come to light and further tweaking will be required (the Body Corporate Amendments did not go as far as some people would like). The Tenancy Tribunal/Courts will also apply the Body Corporate Amendments, creating a new benchmark.

In Hamilton, as residential intensification has already arrived (for example the Hamilton East Residential Intensification Zone) hopefully the Body Corporate Amendments will provide greater peace of mind for those wanting to buy into an apartment complex.

If you have queries about Body Corporate Amendments, our Property Team is able to assist.

Emma is a Solicitor in our Property Team and can be contacted on 07 958 7439.

Ewen is a Senior Solicitor in our Dispute Resolution Team and can be contacted on 07 958 7466.