Bodies Corporate – Ensure levies are raised using the correct fund

A number of Bodies Corporate have recently been caught out and become unable to pursue levies from their owners because the Courts have held that they have raised those levies using the wrong fund under the Unit Titles Act 2010. This was despite the fact that the Bodies Corporate had otherwise followed the correct processes to raise their levies.

The Unit Titles Act sets out a number of compulsory and optional accounts and funds which Bodies Corporate use to raise levies for the various activities they need to undertake, such as long-term maintenance or operational matters.

However, for unexpected matters or activities undertaken by the Body Corporate that are not clearly covered by one of the available funds, for instance unplanned remediation work to the Body Corporate complex, it can be difficult to know which fund to use.

Choosing the wrong fund can have drastic consequences. It can leave your Body Corporate in a situation where some owners can validly refuse to pay their levies which other owners have paid and which are urgently needed for things like vital repair works.

In practical terms these issues can become very difficult for Bodies Corporate to sort out quickly. Urgent meetings of the Committee and Body Corporate may be required, and solving these issues could incur the Body Corporate significant time (such as if quorums cannot be found or the owners cannot agree on how to proceed) and legal costs, all while vital repair works are needed but cannot be paid for.

If you are a member of a Body Corporate committee currently looking to raise levies but unsure which fund to use it would be prudent to get expert advice before proceeding.

Daniel Hunt
Senior Solicitor
Wellington