What is a body corporate?
A body corporate is a legal entity created when land is subdivided and registered to establish a unit titles scheme. Every owner of a flat or lot held under a unit title automatically belongs to it.
The purpose of a body corporate is to enable the owners of the units to be jointly responsible for the insurance for, and maintenance of, the common areas (e.g. the building and grounds). The body corporate also sets the rules about things like how common areas can be used and how much the annual fees are.
The Tenancy Services website has more information about the responsibilities of a body corporate and about body corporate governance.
HOBANZ also has a guide to body corporates.
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What is a unit title?
Like other forms of property ownership, a unit title can be sold or bought, leased or mortgaged.
A unit title is made up of:
- ownership in a particular unit e.g. apartment plus a car park, courtyard and/or garden
- an undivided share in the ownership of the common property e.g. driveway, lifts, communal gardens
If you own a unit title or are thinking of buying one, you need to know your rights and responsibilities as a unit owner. These are covered in the Tenancy Services website.
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What are my rights as a unit title owner and body corporate member?
You have the right to:
- attend body corporate meetings
- quiet enjoyment of your unit, without interruption by other owners or occupiers
- have any dispute resolved (e.g. by using a dispute resolution process)
- enforce body corporate rules
You also have responsibilities, to:
- follow the body corporate rules
- pay all rates, taxes, charges, body corporate levies and other outgoings associated with your unit
- repair and maintain your unit so that no damage is caused to other units or the common property
- comply with all laws and legal requirements relating to your unit
- notify the body corporate if you intend to carry out any additions or structural alterations, before work begins
- not do anything that breaches or undermines any insurance policy held by the body corporate.
For more information see the Unit Titles section of the Tenancy Services website.
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What fees can the body corporate charge me for?
The body corporate usually charges an annual levy to cover day-to-day expenses such as maintenance, insurance premiums, administration and utility charges for common services e.g. outdoor lighting. There may be special one-off costs if the yearly fee does not cover something e.g. a lift replacement.
In some cases the body corporate may ask you to pay them back for the costs of repair or maintenance work - for example if it benefits you more than the other owners, is carried out on your unit only, or if you caused the damage which required the repair work.
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How does a body corporate decide what to do about issues like a broken elevator?
Decisions on improvements or repairs may be covered by the body corporate rules, decided by the body corporate committee, or voted on by body corporate members at an Annual General Meeting (which must be held once per year) or Extraordinary General Meeting (which can be held any time during the year).
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What are my responsibilities as a member of a body corporate committee?.
A body corporate can delegate some or all of its duties to an elected body corporate committee. Your duties as a committee member will vary depending on the body corporate, but the duties of the committee will be specified on the ‘notice of delegation’ which you will have been given soon after you were elected.
Responsibilities which may be delegated to the body corporate committee include:
- Developing or reviewing a long term maintenance plan for at least the next ten years. The plan should identify future maintenance requirements, estimate the costs involved, and state whether there is a long term maintenance fund.
- Maintaining a long term maintenance fund (unless it has been decided by special resolution not to have one)
- Organising maintenance and repair work to common property e.g. cladding, roof, car parks, and arranging for the payment for that work
- Keeping records of the body corporate’s financial transactions and preparing financial statements
- Determining the amount of unit owners’ contributions toward body corporate operational and maintenance expenses, and maintaining the operational account (into which the contributions are paid )
- Insuring the buildings
- Enforcing body corporate operational rules e.g. about the use of common property
As well as the annual body corporate meeting, you may be required to attend regular committee meetings.
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What’s different about buying or selling a unit rather than a house?
When you buy a unit you take on additional responsibilities which you wouldn’t have to if you buy a house and land, for example attending body corporate meetings and paying body corporate levies.
This is why, when someone is selling a unit title, they are required by law to provide disclosure statements to help potential buyers make an informed decision.
There are three types of disclosure:
- pre-contract disclosure statement (which the seller provides before entering into an agreement for sale and purchase)
- pre-settlement disclosure statement (which the seller provides after entering the agreement for sale and purchase but before settlement of the sale) and
- additional disclosure (which the seller provides when the buyer requests it)
It is also worth asking the seller about things like:
- insurance details
- the body corporate’s long term maintenance plan
- the amount of levies
- whether the seller owes any money to the body corporate
- any maintenance on the unit which the body corporate intends to do in the next 12 months.
It is also a good idea to ask whether the body corporate has a fund to pay for maintenance and any developments specified in their long term plan.
You can download disclosure statement templates from the Tenancy Services website.
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The body corporate says I owe them money on repairs done near my unit but I don’t agree. How can we resolve this issue?
Ideally you should try to come to an agreement with the body corporate. If an agreement cannot be made, either party can apply to the Tenancy Tribunal or have the matter settled in court.
You can apply to the Tenancy Tribunal if:
- the dispute is $50,000 or less and
- the dispute is not about the application of insurance money or the title of land (e.g. a redevelopment)
If it is not appropriate for the Tenancy Tribunal to deal with the dispute, it can be referred to the District Court if:
- the matter relates to the application of insurance money up to $50,000 or
- the matter does not relate to the application of insurance money or the title of land, and is between $50,000 and $350,000
Otherwise, the matter can go to the High Court, which can hear:
- disputes relating to title of land or application of insurance money, and over $50,000 or
- other disputes over $350,000
You can read more about dispute resolution relating to unit titles is on the Tenancy Services website or contact MBIE's Unit Titles service. You can call them on 0800 UNIT TITLE (0800 864 884) or send an email.