The important role of bodies corporate

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The important role of bodies corporate

A body corporate is the collective group of owners within a unit titled property. A body corporate is not the appointed administrator of the property. While there is no legal requirement to appoint a professional management company, a good administrator can ensure compliance with legal requirements and take some of the risk of personal conflict out of the more challenging aspect of a property, including debt recovery and addressing breaches of the property rules. Professional managers should also be able to readily provide detailed on-demand financial reporting to assist in proper decision making.

Each unit titled property is a separate legal entity much like a company. A body corporate can sue and be sued, as can office holders such as committee members and the body corporate chairperson. It is important therefore that adequate liability cover including general, statutory and officer bearer cover is held. A body corporate has an obligation under the Unit Titles Act 2010, in addition to other legislation. This includes being considered a Person Conducting a Business or Undertaking (PCBU) in relation to the Health and Safety at Work Act 2015. This obligation requires common areas to be safe and to ensure contractors undertake their work safely. The body corporate also has obligations under the Health and Safety at Work (Asbestos) Regulations 2016, which requires asbestos to be identified and addressed where it is found. A good administrator should be knowledgeable on these matters and able to assist the body corporate in legal compliance.

Often in commercial property, tenants have leases requiring payment of the annual levy, which covers yearly operational costs such as insurance, gardening and common utilities. Frequently this funding includes an allowance for unbudgeted expenses such as repairs and maintenance. Under current legislation there is a requirement for a body corporate to keep an up-to-date long term maintenance plan – although there is no requirement to fund that plan. The ultimate obligation on paying levies rests with the unit owner under the Unit Titles Act 2010.

The Unit Titles Act 2010 is currently under review and some significant changes are expected to be made. A focus of the current review includes possible funding requirements of long term maintenance plans, more comprehensive disclosure requirements on the sale of a unit, greater accountability of professional administrators, and the current dispute resolution process.

You can read submissions (including Scope Strata Management’s) through the Ministry of Business, Innovation and Employment (MBIE) website.

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Steve Plummer