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Unit Owners Seeking Information

What is a Body Corporate?

A Body Corporate is the legal entity that automatically comes into existence at the time of the depositing of the necessary documents relating to a new Unit Title complex at the Land Registry Office following the completion of the construction of the Units. Each Body Corporate is comprised of all of its Unit Owners.

The main functions and obligations of a Body Corporate and its Unit Owners are set out in the Unit Titles Act 2010 ("the Act") and the Unit Titles Regulations 2011 (“the Regulations”). These include requirements for the Body Corporate to insure all of the buildings in its name; to control, manage and administer the common property and keep it in a state of good repair and to do all things reasonably necessary for the enforcement of its Rules.

A Body Corporate is also the best source from which to obtain the necessary information to be provided by Sellers of Units who are obligated under the Act to provide Pre-Contract Disclosure Statements, Pre-Settlement Disclosure Statements and (if requested by a Purchaser) Additional Disclosure Statements. These Statements are also required to fulfill the obligations of Sellers of Units under a standard Sale & Purchase Agreement. The Statements give comprehensive details relating to the Unit being sold and about Bodies Corporate generally.

An independently and professionally administered Body Corporate is essential in order to maximise the opportunities to maintain and enhance the value of the Units. In addition, on-site living will be more assured and pleasant for Resident Unit Owners and Occupiers and there will be peace of mind for Unit Owners who let their Units to Tenants.

Please contact us for further information.

The Role of the Secretary

It is no longer mandatory under the Act that a Secretary be appointed. However, PBCS encourages Unit Owners to appoint them contractually to perform this role in order to provide the necessary services that a Body Corporate needs to function efficiently and in a fair and democratic manner in order to keep within all of the legal requirements. As an indication of good faith and of our confidence in our ability to properly perform the role of Secretary as intended and to the satisfaction of our Unit Owner clients, we do not try to lock ourselves in forever. Instead, we offer ourselves for contractual re-appointment every year.

We ensure that the Unit Owners' Resolutions by which our Secretarial appointments and re-appointments are made specify (in detail) all of the duties and powers relating to our secretarial role. The duties include such things as the annual renewal of insurance; preparing and distributing Notices of Annual and Extraordinary Meetings (and the Minutes of the Meetings) plus Annual Accounts and Budgets; Common Property inspections; preparing and dispatching Levy Accounts and ensuring payments are received by the due dates; banking the Levies proceeds; paying all accounts that have been budgeted for; maintaining the books of account and the Register of Unit Owners & Mortgagees and dealing with all of the many events and enquiries that inevitably arise from time to time.

In fact, we perform all of the tasks, functions and roles that usually have to be undertaken by Committee Member volunteers and this creates the often welcome scenario for removing the need to have an active Body Corporate Committee.

Essential attributes for a good Body Corporate Secretary are to be readily available; to be a good communicator; to have good leadership and people skills; to have access to good Contractors; to be always respectful and fair towards Unit Owners and Occupiers of Units; to have a high level of broadly based commercial/business experience and to have the necessary specialist knowledge relating to Bodies Corporate and the laws under which they must operate.

The fundamental requirement, however, is to be free of all possible conflicts of interest so as to be able to act independently and impartially at all times in the best interests of all. For more information on Conflicts of Interest visit our Unit Owners Seeking Change page and see FAQ question 2.

No Body Corporate Secretary should ever be appointed before full details of his/her experience and qualifications have been notified to those making the appointment and every care needs to be taken to ensure there are no possible conflicts of interest. For more information on Conflicts of Interest visit our Unit Owners Seeking Change page and see FAQ question 2.

Pitcaithly Body Corporate Services Limited is one of only a very few Body Corporate service providers in the South Island of New Zealand that meets the necessary criteria to be a good Secretary as defined above.

Please contact us for further information.

Unit Owners Obligations

What are the Obligations of Unit Owners?

Unit Owners are obliged to observe all of the requirements of the Act and the Rules of the Body Corporate of which they form part.

In addition, Unit Owners are directly responsible for the maintenance of their Units (both inside and outside) at least to a standard sufficient to ensure that no damage or harm is visited upon any other Unit. A badly dilapidated Unit will usually cause the overall values of some or all of the Units in the complex to decline and the reason for not permitting this kind of harm or any other kind of harm - e.g. allowing a balcony or roof to leak on to a lower level Unit, is obvious.

We always ensure there is a clear understanding about the repainting arrangements for the complexes we administer and we make sure the cost of this recurring need plus other longer term maintenance and replacements needs are funded in advance by virtue of Long Term Maintenance Fund Levies. This approach enables the obligations of Unit Owners to maintain their Units and their Body Corporate complex in a collective and timely manner.

The responsibility for repairing exterior damage to the walls, roofs, doors, windows, balconies, etc of their Units (including water penetration faults) also falls directly on Unit Owners except in some rare instances and, without any exceptions, they are also responsible for the costs of maintaining the interior of their Units. Insurance claims for some Unit damage events under the Body Corporate's insurance policy may be admissible.

In situations where Unit Owners let their Units to Tenants, it is useful for the Lease to specify the arrangements between the parties regarding damage plus the fact that the Tenants are obligated to observe the Rules of the Body Corporate.

An important obligation on Unit Owners is that, in most instances, they cannot automatically make additions or structural alterations to their Units without first obtaining the consent of the Body Corporate.

Please contact us for further information.

What does a Unit Comprise?

The Certificate of Title in Stratum Estate for each Unit in a Unit Title complex gives details of the legal description of the Principal Unit and of any Accessory Unit/s. Principal Units and Accessory Units both fall within the definition of "Units." The Certificate of Title will also give details of the Deposited Plan Number of which the Unit/s are part. A typical Certificate of Title will show these as (say) PRINCIPAL UNIT 5 and ACCESSORY UNIT 5A on DEPOSITED PLAN 123456.

The (Deposited) Unit Plan will have been lodged at the applicable Land Registry Office and this will show precisely where the boundaries of all of the Principal Units and Accessory Units are situated. The boundary descriptions will pinpoint the exact locations of the outer vertical perimeters of the Units as well as the locations of their horizontal heights and depths.

It is not uncommon for Unit boundaries to encompass some uncovered land areas in the case of ground floor Units and balconies and/or open deck areas on floors above ground level plus the cubic airspace immediately above the surface of such land or deck areas up to the height limit stated on the Unit Plan. At the same time the depth limits of many ground floor Units will mean that some earth below ground level forms part of those Units.

Where one or more of the vertical boundary edges adjoins another Unit or Units, the actual boundary is usually the vertical centre of a wall or fence or other form of boundary line that adjoins the other Unit/s.

This means that each Principal and Accessory Unit is comprised of a definable and measurable cubic area that may be partly building, partly airspace and partly earth below ground level. Accessory Units are often car parking spaces and, of course, these are mostly nothing more than defined airspace situated in a precise location either inside a building or outside.

Albeit that the Body Corporate is the notional owner of the Common Property of the Body Corporate Complex, an undefined and unallocated share of and interest in the Common Property is automatically deemed to be part of every Unit. The proportionate share of the whole of the Body Corporate Complex (including its Common Property) that is applicable to each Principal Unit and to each Accessory Unit is reflected in the number of Utility Interests that are allocated to each of those Units. The allocated number of Utility Interests applicable for each Principal Unit and each Accessory Unit is shown on the Unit Plan and it is the allocation of these Utility Interests that determines the manner in which costs are shared.

Please contact us for further information.

What are Levies used for?

By virtue of the Act and the Regulations a Body Corporate must raise and collect Levies from its Unit Owners sufficient to carry out all of the Body Corporate's statutory functions.

The Levies will be used for payment of the annual insurance premium for the buildings plus the fee for updating the insurance valuation, maintenance of lifts, landscaping maintenance, postages, stationery, meeting room hire, payment of its Secretarial Fee, ensuring the Building Warrant of Fitness is kept current, common property lighting, various property maintenance requirements, rubbish collection, maintaining/servicing security and access systems, emergency telephones plus a host of other items applicable in some instances.

In addition, the establishment and building up of a Long Term Maintenance Fund over time to be used for the repainting of the exterior of the buildings as and when required and for other longer term maintenance/replacement costs as and when they arise, whilst not mandatory under the Act in New Zealand, is a necessity in well run Bodies Corporate. However, it is mandatory for a Body Corporate to have a Long Term Maintenance Plan.

Please contact us for further information.

Grounds/Building Maintenance

A well run Body Corporate will ensure that the Common Property comprising the grounds, some parts of the buildings and other amenities (pools, tennis courts, etc) look their best at all times. As Secretary of our various Body Corporate client complexes we engage reliable independent Contractors in their various fields to carry out all necessary Common Property maintenance tasks as and when required - either for regular work on an ongoing basis or to attend to one-off tasks. It is our objective to ensure that the work performed is always of a high standard.

We encourage Unit Owners to draw our attention to maintenance needs observed by them from time to time.

It is the legal duty of every Unit Owner to ensure that their Units are maintained to an acceptable standard. As a totally independent Secretary of our Body Corporate client complexes we endeavour to ensure that this is done in a manner that causes the least amount of pain and/or conflict with other Unit Owners.

We can also assist Unit Owners to find a suitable Contractor to undertake work in or on their Units when the work required to be undertaken has to be at their own private cost.

Please contact us for further information.

Body Corporate Insurance

Perhaps the most important function of a Body Corporate as set out in the Act is the requirement that the Body Corporate must insure all of the buildings in its name. Following the recent Christchurch earthquakes and the discovery that many Body Corporate buildings there were under-insured, we believe it is sensible to insure the buildings for their full replacement value. To do this, it is necessary to engage a Registered Public Valuer to update the Insurance Valuation of the Buildings every year.

As protections for all Unit Owners, the Act requires (a) that proceeds of any claims made under the Body Corporate's insurance policy must be fully used to reinstate the damage in respect of which the claim was made and (b) that an Insurer cannot cancel a Body Corporate insurance policy without first giving 30 days notice to every Unit Owner and Mortgagee.

We have encountered instances where an individual Unit Owner has directly insured a Unit in his or her own name. Not only is this a breach of the Act, but it is also often more expensive.

We use a range of reputable Insurance Brokers and we challenge them each year to come up with the best value for money insurance quote. Claims for some interior damage events affecting individual Units are often admissible under a Body Corporate's buildings insurance policy.

It is important to note that all Unit Owners should arrange and put in place their own comprehensive contents insurance policy if they occupy their Units or if they let their Units on a fully furnished basis. In those cases where their Units are let on an unfurnished basis, there are usually still the carpets, drapes and some appliances to think about as these are owned by the Unit Owners and not the Tenants. Sometimes, an extension to cover these chattels may have been arranged as part of the Body Corporate's buildings insurance policy.

It is important that the Lease Agreement applicable to a tenanted Unit contains a condition binding the Tenant (at the cost of the Tenant) to arrange and put in place a Tenant's comprehensive contents insurance policy including a Tenants' Liability extension. This latter extension will protect the Tenant against recovery action by the Body Corporate's Insurer where the Tenant may have caused damage that has been reinstated by and at the cost of that Insurer.

Please contact us for further information.

Making Additions to Units

An important obligation on Unit Owners relating to this matter arises by virtue of the Act. A serious breach will arise if additions or structural alterations or (in some cases) other changes are made to Units without first obtaining the consent of the Body Corporate.

Naturally, Local Authority Building Consents must also be obtained where applicable as this requirement, is an obvious by-law requisite of the Local Authority, We are able to assist Unit Owners with the process of endeavouring to obtain the necessary Body Corporate consents to facilitate desired additions/alterations/changes.

Additions to Units, in some instances, will involve a Unit Owner in having to undertake to arrange and pay for the cost of changing the Unit Plan of the Body Corporate following their completion. We know what needs to be done in order to bring about the necessary changes to the Unit Plan in these circumstances and can give an indication of the likely costs.

Where additions have been made over a period of time and they are such that the Unit Plan no longer reflects the current boundaries of the Units or the outlines of the buildings contained within the Principal Unit areas, there are likely to be difficulties when it comes to selling affected Units. We know what needs to be done to organise an updating of Unit Plans in respect of past additions to Units.

Please contact us for further information.