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 2022 was crafted against the background of New Zealand’s changing housing landscape.

The purposes of the Amendment Act 2022

The general purposes of the Amendment Act 2022 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.

These changes will come into force in three separate stages.

The first stage came into force on 9 December 2022.  This included provisions allowing Body Corporate meetings to be run meetings via audiovisual link.

The second stage came into force on 9 May 2023.  This includes the provisions relating to disclosure.

Provisions that will require further regulatory development or preparation will take effect on 9 May 2024

The Disclosure Regime (Came into Force on 9^th May 2023)

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

             iv.   Earthquake-prone issues; or

             v.    Any other significant defects in the land (including the unit title development and the land on which it is situated) that may require remediation

• 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 statements:
• 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 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.

In an important change, if the Pre-Contract Disclosure has not been provided by a date 5 working days before the settlement date, the buyer is entitled to delay settlement until five working days after the Pre-Contract Disclosure Statement is provided.  This essentially creates a penalty for failing to provide the statement.

If the vendor, after receiving a further notice from the purchaser, still does not complete an accurate Pre-Contract Disclosure Statement, then the purchaser may elect to cancel the agreement, or elect to proceed.  There are some restrictions around cancellation, including if there has been reasons given in the statement for not being able to provide full and accurate information, and that the information did not exist or could not be found.

The rights to delay settlement due to failure to provide a Pre-Settlement Disclosure Statement remain in place.

Additional Disclosure has been repealed, so will no longer exist.

Committees and Meetings (Came into Force on 9^th December 2022)

The Amendment Act 2022 allows Body Corporates to conduct meetings by audio or audio-visual link.  During the Covid-19 pandemic, this had been allowed on a temporary basis but the Amendment Act establishes this as a permanent option. Voting can also be able to be done electronically.

This is no doubt be useful for Bodies Corporates who have members residing overseas, to encourage their participation in meetings.

Body Corporate Managers (Came into Force on 9^th May 2023)

The Amendment Act 2022 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 is located in Schedule 1A of the Unit Title Regulations 2011.

Dispute Resolution Processes (Came into Force on 9^th May 2023)

The Amendment Act 2022 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 2022 also increases the threshold for unit title disputes that can be heard by the Tenancy Tribunal from $50,000 to $100,000.

Large Developments (Will come into Force on 9^th May 2024)

The Amendment Act 2022 has provisions relating to ‘large developments’. This term refers to unit title developments including at least 10 principal units.

Under the Amendment Act 2022, 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;

Conclusion

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