Mackenzie Elvin

The new regime for Unit Titles

The Unit Titles Act 2010 came into force in June 2010, replacing its predecessor the Unit Titles Act 1972.

Whether you are the owner of a unit title property, a prospective purchaser of a unit title property or a developer of unit title developments, you will need to be aware of the changes brought in by the 2010 Act.

The Minister for Building and Construction, Maurice Williamson, has described the purpose of the new Act as being to:

• clarify the definition of a principal unit - a principal unit must contain or be contained in a building;
• streamline the process under which a development is built in stages;
• create a sensible and fair system for calculating how much a unit owner should contribute to body corporate common funds;
• state that the body corporate owns the common property;
• clarify and articulate the rights and responsibilities of unit owners and bodies corporate;
• create fair and transparent governance and management structures;
• lower the voting threshold for body corporate decisions from a unanimous resolution to a 75 per cent agreement;
• provide a comprehensive disclosure regime for buyers and sellers, developers and bodies corporate;
• provide a fully integrated and cost-effective dispute resolution service for unit title disputes, through the Tenancy Tribunal. [1]

Certainly, a number of these objectives have been achieved.

A principal unit is now defined in s7 as a unit that either contains or is contained by a building or part of a building and is not a car park. This means that a unit can no longer just be three dimensional space.

Unit developments can now be layered, or staged, by further subdividing a principal unit into a further unit title development, creating subsidiary units.

Unit owners now have an ownership interest that is established by a registered valuer at the time the plan is deposited, and it is based on an assessment of the unit value relative to the other units in the development rather than on the size of the unit. The utility entitlement, upon which contributions to maintenance and other funds are calculated, is based on the ownership entitlement but can be varied by the body corporate to achieve a fairer result in cost sharing.

Whereas unit owners used to own a share in the common property of a unit title development, in shares proportionate to their unit entitlement, all common property is now owned by the body corporate with the unit owners retaining a beneficial interest in the property.

When it comes to the body corporate passing resolutions, the number of unit holders required to achieve a quorum has been lowered to 25%. An ordinary resolution may be passed by a simple majority, with a special resolution requiring 75%. The body corporate is now able to sign documents that have been approved by the body corporate where the unit holder has failed or refused to do so.

The consent of the body corporate is no longer required by a unit holder wanting to alter their unit, providing the alterations do not materially affect any other unit holders.

New disclosure requirements place the onus on a unit holder to provide pre-contractual disclosure to any purchaser or prospective purchaser and then pre-settlement and, if requested, further disclosure to any purchaser. The disclosure requirements under the Act are new and are mandatory.

Body Corporates have until December this year to hold their first annual general meeting under the new Act and until September 2012 to address matters that have a 15 month transitional period such as Long Term Maintenance plans, body corporate repair and maintenance schedules and body corporate rules.

As a unit holder, now may be the time to consider becoming more involved in the governance of the body corporate of your development. For anyone with an interest in unit titles, now would be a good time to seek further advice as to how the new regime will affect them.

For further information or advice contact Carolyne Taylor, senior solicitor, at This e-mail address is being protected from spambots. You need JavaScript enabled to view it , or (07) 578-5033.

November 2011

[1] Minister’s announcement, Maurice Williamson, 1 April 2010 http://www.beehive.govt.nz/release/new-law-apartment-blocks-passed