A Bill is making its way through Parliament which proposes changes to the current Unit Titles Act 2010 (“the Act”). 

The Unit Titles (Strengthening Body Corporate Governance and Other Matters) Amendment Bill has been crafted against the background of New Zealand’s changing housing landscape and is approaching its Third Reading in Parliament.

The purposes of the Bill

The general purposes of the Bill 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 will also essentially tidy up any other problem or ambiguous areas in the Act.

The Disclosure Regime

If the Bill becomes law, additional information will 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:

•          Weather tightness issues for which a claim has been made under the Weathertight Homes Resolution             Act 2006; or
•          Weather tightness issues that have been remediated without a claim under that Act or other                               proceedings before a court or tribunal; or
•          Weather tightness issues that have not been remediated; or
•          Earthquake-prone issues; or
•          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:
•          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

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 as at Third Reading.

Committees and Meetings

The Bill will allow Bodies Corporate to conduct meetings by audio or audio-visual link.  Under the current Act this has been allowed on a temporary basis, during the Covid-19 pandemic, but the Bill seeks to have this as a permanent option.  Under the Bill, 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 Bill intends to impose obligations on Body Corporate managers, who are not mentioned in the current Act and currently do not have any regulations governing them.

This will include of 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 a schedule to the Unit Title Regulations 2011.

Large Developments

The Bill will have provisions relating to ‘large developments’. This term will refer to unit title developments including at least 10 principal units.

Under the Bill, large residential developments must:

• Have a Body Corporate manager;
• Have the committee report back on delegations at every general meeting;
• 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;
• Have a long-term maintenance fund (noting they can opt out of this);
• Audit their long-term maintenance fund.

Dispute Resolution Processes

The Bill 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 Bill also seeks to increase the threshold for unit title disputes that can be heard by the Tenancy Tribunal from $50,000 to $100,000.

Conclusion

Should the Bill become law, it will be important for all Bodies Corporate and their advisors to be aware of, and comply with, the new requirements.

Parliament next sits in May 2022, so we can expect that the Third Reading for the Bill may take place in the following weeks, so ‘watch this space’.