Body corporates - do you know how they operate?

2020-02-15 -

WHAT DOES becoming part of a body corporate mean when you buy a unit title property? Unit title ownership is most common in a building where there are multiple owners.

These include apartments, townhouses and units where residents not only own their dwellings but also anything else listed in the record of title, such as garages, car parks and private outdoor areas.

Unit title owners also have an undivided share of the common property, such as lifts, lobby areas, driveways and shared gardens.

When you buy a unit title, you automatically become a member of its body corporate, which handles the management and maintenance of the building and property.

Real Estate Authority chief executive Kevin Lampen-Smith says its important unit title buyers clearly understand their body corporate responsibilities.

“Your lawyer or conveyancer can help you understand the body corporate rules – your obligations and what you can and can’t do with your apartment or townhouse.”

Most day-to-day decisions of the body corporate can be made by a committee or with the agreement of at least half of the unit owners.

Some decisions will require the agreement of at least three-quarters of the unit owners.

The body corporate must meet annually to discuss issues and vote on them.

An annual body corporate fee helps to cover costs like insurance and management expenses, contribute to a long-term maintenance fund and any services such as rubbish collection and cleaning communal areas.

Any body corporate costs not included in the budget are usually payable by a special levy.

Unit title owners must provide buyers with: • A pre-contract disclosure statement before entering into an agreement for sale and purchase

• A pre-settlement disclosure statement after entering the agreement for sale and purchase but before settlement of the sale

• Any additional information requested about the body corporate, such as the insurance policy for the property and liabilities like repair bills and maintenance fees (buyers may need to pay for this).

The Ministry of Business, Innovation and Employment ‘s unittitles.govt.nz site covers everything unit title buyers need to know but the REA says chatting to other unit, apartment or townhouse owners can be helpful.

“Not only will they be able to give you their opinion on what it’s like to live at the property, but they will also be able to give you an owner’s perspective on how the body corporate functions – if it has been working well, if any works are outstanding or if there are matters that have not been logged in the body corporate meeting minutes.”

Typical of the questions to ask when buying a unit title:

• Can I have a copy of the body corporate’s rules?

• Can I get copies of the minutes from the body corporate’s meetings?

• How are the body corporate’s finances managed?

• Can I see the financial reports and budgets from the previous years?

• Are there regular fees I need to pay? If so, how are these collected?

• Are all the owners’ levies up to date? • Does the body corporate have a longterm maintenance fund?

• What is the body corporate’s long-term maintenance plan? What does it cover?

• Does the long-term maintenance fund have enough money in it to pay for the repairs and maintenance detailed in the plan?

• Is there any major maintenance due and are there are funds to complete it?

• What is the building’s insurance policy? • How many units or apartments are owner-occupied?

• Of the tenanted properties, are the rentals long or short-term?