What is a Body Corporate?
A Body Corporate consists of all the owners of the units within a Unit Title property.
The Body Corporate is a legal entity. And is governed by the Unit Titles Act 2010 and Unit Titles Regulations 2011. Most Body Corporates also adopt their own set of Operational Rules which govern the day to day operational issues within a property.
The Body Corporate members meet annually to elect a Body Corporate Chairperson and also a Committee who are in charge of the Body Corporate between General Meetings. The Committee must follow the directions given to it at a General Meeting. When certain issues arise the Body Corporate Committee may call an Extraordinary General Meeting (EGM), so everyone has a chance to discuss the matter and then make a decision.
A company such as Scope Strata are appointed to work with the Body Corporate and its committee. They will be appointed to provide a certain service and be paid an amount each year for this role. Scope Strata are under the direction and instruction of the Body Corporate and cannot simply act independently from the Body Corporate (if they did they would be accountable for that action).
What are the responsibilities of the Body Corporate?
There are a number of responsibilities that a Body Corporate must do (and some that they can elect to do). This includes:
Accessory Unit (AU)
An area of land or a building designed for private ownership in conjunction with a Principal Unit – for example, a car parking space, Courtyard, garage.
Chairperson of the Body Corporate
The owner appointed as the Body Corporate Chairperson at a General Meeting (usually at the AGM). The responsibilities of this role are outlined in Regulation 11 of the Unit Titles Regulations 2011, but often delegated (all or some) to the Body Corporate Committee.
Chairperson of the Body Corporate Committee
The owner appointed by the committee as the Chairperson of the Committee. This role is often added to the role of Chairperson of the Body Corporate and generally covers the liaison role of the committee to the building manager and Manager appointed for the Body Corporate administration.
Contingency & Long Term Maintenance Funds
The Body Corporate may choose to put aside funds towards future repairs and maintenance, or longer term costs such as repainting, or reroofing. These funds build up over time and can be used as and when the Body Corporate decides (either through the committee, or by decision at a meeting of owners).
The Body Corporate may choose to set aside funds towards items identified in the Long Term Maintenance Plan. There are restrictions around the use of these funds for other work outside the plan, or costs that are greater than the estimates given in the plan. The objective with all funds is that owners consider the future cost of maintenance, whether repairs and maintenance or future capital costs and allow for these costs (all or some) within their annual budget.
Under the Unit Titles Act 2010, sellers are required to provide detailed information to purchasers. The Unit Titles Act provides various disclosure statements that are part of the selling process and are legally required to be given to the purchaser. This includes:
Pre-Contract Disclosure Statement – This statement must be provided when listing the unit for sale. The pre-contract disclosure statement includes amougst other things information about unit title ownership, the amount of the levy, upcoming maintenance to the development, whether the unit or common property has had any weathertightness issues.
Pre-Settlement Disclosure Statement – This statement must be provided after entering into an unconditional agreement for sale and purchase. The purpose of this statement is to provide a summary of the current levies and any charges relating to the unit. It also includes advice on any legal proceedings are being taken or about to against the Body Corporate and any changes to the Body Corporate rules.
Additional Disclosure Statement – This statement is optional and may be requested by the buyer. In this event and unlike the former statements the cost rests with the buyer. The purpose of the statement is to provide Body Corporate records on maintenance, insurance, financial matters and other governance issues.
Scope Stata can provide the disclosure statements noted above to the owner or their lawyer on written request. The cost of the disclosure statements is usually charged to the owners levy invoice for payment.
Disputing Body Corporate Matters
The Unit Titles Act 2010 directs that most disputes are heard in the Tenancy Tribunal (where the claim amount is no more than $50,000 along with several other restrictions). The current fee to proceed with a dispute for unpaid levies is $850 and in most other cases is $3,300 due to the often complex nature of such disputes.
For more information on Residential Tenancies (Unit Title Disputes) Rules 2011, please click here.
Long Term Maintenance Plan
Under the Unit Titles Act 2010 all Bodies Corporate must hold a current Long Term Maintenance Plan. The plan identifies the building elements and other features which the Body Corporate will need to attend over the next ten years along with the estimated costs of this work. The plan must be updated every three years.
Many Bodies Corporate have adopted a set of Operational Rules that provide guidance for day to day governance of their property (otherwise Schedule 1 of the Regulations provides base rules). The Rules generally cover things such as use of the common areas, the exterior of the building, animal control and what behaviour is expected within the property. Such rules can be amended by owner majority as approved at a meeting of owners (or by postal ballot).
Ownership & Utility Interest
Ownership Interest (OI) is determined by a registered Valuer before the Unit Plan is lodged. OI is based on the relative value of the units (including Accessory Units) in relation to the other units at the complex. These values are shown on the schedule of the Unit Title Plan. The OI% is used to raise funds for ground rent (where applicable) and or for any capital improvement fund.
Utility Interest (UI) is the same as the Ownership Interest unless changed by Special Resolution of the Body Corporate. The UI% is used to raise operational costs (including contingency and long-term maintenance funds) to towards the day-to-day costs of the Body Corporate.
In most bodies corporate the Ownership and Utility Interests remain the same (the default) and although they can be changed the process requires Special and Designated resolutions (Designated Resolutions require additional legal processes). Ownership Interest changes must be calculated by a registered Valuer. Once changes are made and lodged with Land Information NZ no changes can be made for 36 months.
Principal Unit (PU)
A unit primarily designed for use as a residence or business (e.g. Office/Retail) as shown on the Unit Plan.
The number of owners that must be present or represented at a General Meeting of the Body Corporate is 25%. This % is calculated from those individual units represented at the meeting (those attending plus any proxies and postal ballots received).
An Ordinary Resolution is a decision that requires a simple majority of owners voting at a meeting (or by separate postal only voting in lieu of a meeting) to pass. A Special Resolution is a decision that requires a 75% majority at a meeting (or by separate postal only voting in lieu of a meeting) to pass. The Unit Titles Act identifies matters that need to be determined by a Special Resolution otherwise the matter will be decided by an Ordinary Resolution.
The Unit Title property plan which shows the Lot, Principal Units, Accessory Units and Common Property that has been lodged with Land Information New Zealand.
Unit Title Act 2010
The Unit Titles Act 2010 (UTA 2010) and Unit Titles Regulations 2011 provide the legal structure that Unit Title property works within. Below are a number of common terms and helpful information that provides some of the key things that may help you.
To view the full Unit Titles Act 2010 please click here.
To view the full Unit Titles Regulations 2011 please click here.