One type of property, unit titles, involve body corporates, which are a collective of unit owners within a multi-unit building or complex.

These are typically the type of title NZ apartment blocks or townhouses have and tens of thousands of Kiwi home owners own property with this type of title.

They involve costs and specific rights and responsibilities which we’ll explain here.

Unit titles:

A unit title is a form of multi-unit property ownership.

The number of Kiwi property owners who own apartments and townhouses is increasing, driven by the cost of housing and legislation aimed at more compact living such as Auckland’s Unitary Plan.

Unit titles are quite different from simple freestanding house and land ownership because they involve a special combination of individual and shared ownership. Unit title owners own a defined part of a building, such as an apartment, and share common areas such as foyers, lifts or driveways with other owners.

Residential unit title properties are typically apartment blocks and townhouses, although townhouses or terrace houses can alternately be on freehold fee simple titles so it’s vital to check their title to know what you’re buying.
(Unit titles are very different from other common types of NZ property such as estate in fee simple, or cross lease properties).

With unit titles you can either own a stratum estate in freehold under the unit titles act (or a stratum in leasehold if it is on leasehold land).
The special situation involved with leasehold ownership, in which you own your building or your portion of it but not the land, is explained under a separate article, which can be found HERE. [Link to my leasehold article, which is to be written next]

Why potential buyers need to understand unit titles & body corporates:

There can be great advantages to owning an apartment or townhouse but because there are significant implications of unit title ownership, you’d be a fool not to at least learn about the basics.

Apartment owners will invariably be required to pay a body corporate fee or levy every year on top of their apartment’s purchase price. This fee can vary widely between apartment complexes, influenced by whether they have few shared facilities or a plethora of luxurious ones. The number of owners sharing the facilities is also important as the cost of maintaining facilities such as a swimming pool, gym, groomed gardens or shared lounges may be spread over many owners or just a few in a boutique complex.

Because there is an element of shared ownership involved owners cannot decide everything for themselves individually and will be bound by the rules of the body corporate.

What is the Unit Titles Act?:

Bodies corporate are bound by the Unit Titles Act 2010 and the Unit Titles Regulations 2011. These govern all unit title properties and set out the rules and regulations so they can be managed effectively.

The Unit Titles Act is supported by rules and regulations covering:

• Body corporate meetings, elections, financial management and how sellers disclose information (Unit Titles Regulations 2011)
• Access to dispute resolution and what it costs (Unit Titles (Unit Title Disputes – Fees) Regulations 2011)
• Information about how existing rules can be applied in unit title disputes (Residential Tenancies (Unit Title Disputes) Rules 2011)

Proposed changes to the Unit Titles Act:

Proposed changes designed to bring about more modern and coherent updates to New Zealand’s existing Unit Titles Act 2010 are the subject of the current Unit Titles (Strengthening Body Corporate Governance and Other Matters) Amendment Bill.

This member’s bill under National housing spokeswoman Nicola Willis is proceeding through the process required for a bill to become law. It is not in effect at all at this stage, but more announcements are expected as it progresses.

A unit owner’s rights:

• Holding a share in the common property proportional to their ownership interest
• Having quiet enjoyment of their unit without interruption by other unit owners or occupiers
• Making alterations, additions or improvements within the boundary of their unit which do not materially affect any other unit or common property
• Attending general meetings of the body corporate and having a vote in respect of their unit
• A right to enforce the body corporate operational rules
• A right to the dispute resolution process

A unit owner’s responsibilities:

Key responsibilities include:

• Paying all outgoings required in respect of their unit, including body corporate levies, rates and taxes.
• Repairing and maintaining the unit and keeping it in good order.
• Notifying the body corporate of any intention to carry out additions. Any alterations that will materially affect any other unit or common property must have the written consent of the body corporate.
• Permitting the body corporate to enter the unit (after receiving reasonable notice) to view its condition, repair common property and ensure the operational rules are being complied with.
• Complying with all laws and legal requirements relating to the use, occupation, or enjoyment of the unit.

Operational rules:

All unit owners, occupiers and tenants must comply with a body corporate’s operation rules. The default operational rules (which may be amended to suit a development’s individual characteristics) are set out in the unit titles regulations. They are:

An owner or occupier of a unit must not:

• damage or deface the common property
• leave rubbish or recycling material on the common property
• create noise likely to interfere with the use or enjoyment of the unit title development by other owners or occupiers
• park on the common property unless the body corporate has designated it for car parking, or the body corporate consents
• interfere with the reasonable use or enjoyment of the common property by other owners or occupiers.

Plus, an owner or occupier of a unit must dispose of rubbish hygienically and tidily.
The body corporate must hold AGMs at least once a year, so that all unit owners can discuss any issues of concern, and vote on decisions affecting the complex.