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Options for Change – A Review of Unit Titles Act

Options for Change – A Review of the Unit Titles Act

Property ownership in New Zealand is changing faster than the legislation can keep up. But thanks to lobbying from the Law Commission, Regional Councils, the building industry and the New Zealand Institute of Surveyors (NZIS), the government is carrying out a timely review of the Unit Titles Act.

“The Unit Titles Act was created in 1972 and in the ensuing 34 years, the use of the legislation has outgrown its original intent. NZIS has been lobbying for a review of the Act to bring it in line with 21st century practices,” said Michael Morris, Director of Axis Survey Consultants Ltd and member of the Legislation Committee of the New Zealand Institute of Surveyors.

“The trend towards living and working in intensive, multi-unit developments will continue, so it’s important for New Zealanders to understand the legislation that will ultimately affect the way they live. Surveyors have an in-depth working knowledge of the current legislation and are ideally placed not only to make a major contribution to its review, but to advise people about the changes and the impacts they could have on their particular situation.”

Options for Change – a review of the Unit Titles Act, is being undertaken by the Department of Building and Housing. The intention is to update the Act to improve the law around multi-unit developments and in doing so, make the Act more flexible, more straightforward and better suited to the changing environment we live in.

The Act covers the creation, ownership and management of unit title property and the setting up, powers and responsibilities of bodies corporate – an entity made up of all the owners within a unit title development. The trend of intensive development in New Zealand has lead to a proliferation of unit title communities. It is now common place for these communities not only to accommodate the traditional single use developments but to incorporate mixed uses. The evolution in the type of developments utilising the unit title tenure, and the need for flexibility to allow for change are not accommodated in the Act. While not entirely to blame, neither has the legislation helped the concepts of community management, participation and informed decision making

Michael Morris says that research has revealed a lack of transparency and accountability in the way unit title developments are governed and managed. Disclosure provisions are not adequate and buyers and owners of units are not well informed although it is arguable whether this is the fault of the legislation. “For unit developments to run smoothly, they must be set up well in the first place, which is why we advocate for the involvement of surveyors from the outset. Involving surveyors well before design and construction occurs, will ensure developers have the right advice about the structure and layout of their developments”, he says.

Suggested changes to the Act are intended to provide a workable, legal framework for communities of individuals to own and manage land, buildings and facilities in a socially and economically sustainable way.

The discussion document explained the effect of the proposals to make title and survey matters clear, which will ensure developers, surveyors, lawyers and councils are clear about the definition of a principal unit. Unit owners won't have to ask the body corporate if they want to make alterations and additions to buildings inside their unit boundary. However, they will still have to obey body corporate rules and any other relevant building and construction laws and regulations.

Another common problem with the Act arises from people’s confusion about boundary issues, which can lead to complex and expensive arguments about common property and responsibility for repairs or maintenance. A proposed new definition will recognise and reinforce that unit dwellers are part of a community and should share the cost of anything that benefits the whole community.

Changes to plans have long been an issue of contention for unit titleholders and a proposed amendment will make minor boundary changes less cumbersome. At present, boundary changes need the consent of every unit owner, owners of future development units, mortgagees and all other people having a registered interest in a unit title. This requirement for 100 percent agreement is inflexible, is often difficult to obtain and the process can be difficult to manage.

The perceived lack of fairness relating to shared costs is also being addressed in the review. The Act is not flexible about the concept of unit entitlement, which determines the proportion of body corporate expenses that an individual unit owner pays. Unit entitlement is based on the relative value of a unit, whereas the new proposal will see an owner's share of expenses more closely tied in with their use of the facilities.

The Body Corporate is a fundamental element of unit title developments. While the Act defines roles, responsibilities and relationships, it needs to be updated to include the concept of community living. Many people who buy a unit title property know little about the body corporate, their relationship to it and their rights and responsibilities as a unit owner. This uncertainty can make relationships difficult, particularly among tenants, absentee landlords, the body corporate and professional body corporate managers.

The review proposes a new structure for body corporate governance, which will ensure unit owners are able to make informed decisions about how their living or working environment is managed. It also advocates for the establishment of a central government agency to provide information and assistance to people with, or contemplating ownership of a unit development. This agency would also provide a dispute resolution function.

“The discussion document was a positive continuation of the review process,” says Michael Morris. “However the ability of any resultant legislation to deliver on the concepts and proposals will be contained in the detail. The New Zealand Institute of Surveyors will continue to work closely with the Department of Building and Housing and other professions with a common goal of resulting in an improved piece of legislation.”

The date for submissions has now passed, but the discussion document outlining the issues and options for change, and a summary of the submissions, can be found at: http://www.dbh.govt.nz/unit-titles-review/introduction.html

ends


Michael Morris is the Director of Axis Survey Consultants Ltd and a member of the Legislation Committee of the New Zealand Institute of Surveyors. In this capacity he developed the Institute’s submission to the Department of Buildings and Housing on the review of the Unit Titles Act and continues to work closely with them.

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