Unit Title Amendment Act 2022

UNIT TITLES (STRENGTHENING BODY CORPORATE GOVERNANCE & OTHER MATTERS) AMENDMENT ACT – 9 MAY 2022.

More and more New Zealanders, especially in West Auckland, are living in Unit Title properties.  The new Act represents a stronger legal framework for “apartment living”, which is on the increase in Auckland and in the Waikato. As you know, Unit Titles properties are run by a Body Corporate.  Some are managed by a professional organisation; however, many are run by a collective of owners.  Because of that, some are not run very well.  Therefore, a key theme of the new Act is on governance because unit titles are not just about ownership, but how people live and work together, make decisions, regulate each other, resolve issues and what bills they pay.  The issues are not just financial - they include individual autonomy, communal interests and how people work through issues. 

So exactly what changes does the Amendment Act bring to the Unit Titles Act?

• It allows for a utility interest to be a single interest or a multiple set of interests (section39(2B). 
• It clarifies the extent of unit owners’ rights and responsibilities (sections 79-80).
• It sets an obligation for a Body Corporate to keep records in order to allow disclosure information to be provided (section 84).
• It locks in the right of an owner or committee member to attend a meeting by AVL (section 88).
• It clarifies that an owner must be paid up to be part of the quorum (section 95).
• It clarifies that matters at a Body Corporate meeting are to be decided by ordinary resolution unless the matter has been delegated or requires a special resolution (section 101). 
• It allows for a vote to be in person, by proxy or electronically (sections 102 and 103A).
• It clarifies that a matter to be decided by special resolution cannot be delegated (section 108).
• It defaults to the Body Corporate chairperson and Committee chairperson being the same person (section 112A).
• It requires a Committee to have an agenda for each meeting and to keep written records of meetings and decisions (section 113).
• It requires the Committee members to comply with a code of conduct. There is an obligation on committee members to disclose “conflicts of interest” and for an interests register to be kept (section 114A – 114F).
• A definition of ‘Body Corporate Manager’ has been added to the Act as “a person employed or engaged to undertake record-keeping, financial and/or regulatory compliance services”.  Each manager must have a written agreement and disclose any conflicts of interest. The manager must also comply with a code of conduct (sections 114G– 114J).
• A decision not to have along-term maintenance fund must be confirmed annually (section 117).
• The original owner’s obligations in relation to service contracts have been recast and extended to signage agreements. Contracts longer than 24 months are subject to additional compliance requirements (section 139).
• The disclosure provisions have been extensively written.  Fortunately, both pre-contract disclosure and pre-settlement disclosure have been retained. However additional disclosure has also been abandoned through the repeal of s 148.
• This brings Unit Titles disclosure within the broader field of contractual remedies (sections 146, 149,and 149A).
• Importantly, there is now an express ability for a purchaser to delay settlement, or cancel, if pre-contract disclosure is not provided properly, though notice, and an opportunity to remedy must be given before these rights are exercised. 
• There are restrictions on the circumstances in which the cancellation remedy can be exercised:

a) the seller may state that the information is incomplete, or incorrect, as full information could not be found; or

b) the incomplete or inaccurate information may not have substantially reduced the benefit or increased the burden on the buyer; or

c) the seller may provide the missing or incorrect information before cancellation. 

• Rights to delay settlement or cancel for issues with pre-settlement disclosure have also been rewritten. Settlement may be delayed or the agreement cancelled following notice and an opportunity for the seller to remedy the failure to properly disclose (sections 151 – 151A).

 UNIT TITLES WITH 10 PLUS PRINCIPAL UNITS

Additional compliance obligations have been placed on large Unit Title developments i.e., those with 10 or more principal units:

• a large development must have a body corporate manager unless there is a special resolution otherwise, and must have a 30-year long-term maintenance plan.
• The jurisdiction of the Tenancy Tribunal has been increased to $100,000 and (reflecting that costs issues often have their challenges) detailed provisions have been added as to reasonable legal costs (section 176AAA).  
• The Tribunal has also been empowered to make pecuniary penalty orders where a Body Corporate manager has intentionally and unreasonably breached certain duties. A body corporate may also be subject to such an order in some instances (sections 176A – D).
• New provisions as to ‘improvement notices’ have been added to help to remedy or prevent a contravention of the legislation (s 176E – I). 
• The Tribunal also exercises oversight of improvement notices.
• The powers for MBIE to require copies of documents or to inspect a Unit Title development have been beefed up (sections202A – F).

These changes help New Zealand move towards a more mature Unit Titles environment however not everyone will be satisfied with the changes. As Auckland moves toward greater intensification in the way we live and work, the law must also move to keep up. Having said that, even good law can’t resolve every neighbourly issue, but it helps to provide a constructive framework for the resolution of issues.