A new piece of legislation has made its way through Parliament which puts in place  changes to the Unit Titles Act 2010 (“the 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.

The purposes of the Amendment Act

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; and
•          Strengthen dispute resolution processes by creating a better system for legal costs.

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

The exact date that the Amendment Act will come into effect will be determined by Orders in Council, which have not at the date of writing been issued (or if no such Orders are issued, then two years after the date of Royal assent – which will be 9 May 2024).

The Disclosure Regime

Additional information will now need to be provided by the Body Corporate in the Pre-Contract Disclosure Statement, including:

•          whether the Body Corporate or Body Corporate committee has actual knowledge that any part of the                  unit title development has:

                     (i)         weather tightness issues for which a claim has been made under the Weathertight Homes                                             Resolution Act 2006; or

                     (ii)        weather tightness issues that have been remediated without a claim under that Act or other                                           proceedings before a court or tribunal; or

                    (iii)        weather tightness issues that have not been remediated; or

                    (iii)        earthquake-prone issues; or

                    (iv)        any other significant defects in the land (including the unit title development and the land on                                          which it is situated) that may require remediation:

                    (Note that a definition of weather tightness issues is also included in the Bill)

 

•          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                 time 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 three 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 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 pre-settlement disclosure                  statement, records of title, the land information memorandum issued under s44A of the Local                            Government Official Information and Meetings Act 1987.

 

Earlier versions of the Bill had a requirement for the Body Corporate to ‘endorse’ Pre-Contact Disclosure Statements, which would be a change from the current regime which only requires these to be signed by the Vendor.  However this recommendation was not adopted in the final version of the Amendment Act.

Committees and Meetings

The Amendment Act will allow Bodies Corporates to conduct meetings by audio or audio-visual 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 no doubt be useful for Bodies Corporates who 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, large residential developments must:

• Have a Body Corporate manager;
• Have a long-term maintenance plan for a 30-year period that is reviewed every three years, or reviewed earlier if the Body Corporate becomes aware of something that affects the long-term maintenance plan;
• Have their 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 an Tenancy Mediator; and
•  $500 for an application referred to adjudication.

These changes abolish the current ‘Category 1’ and ‘Category 2’ proceedings regime.  This will make access to the Tribunal much 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.

Conclusion

It is important for all Bodies Corporate and their advisors to be aware of, and comply with, the new requirements.