Can I trust a seller's building report?
Buyers | 27 March 2019
By the Settled.govt.nz team
Understanding the different kinds of home ownership in New Zealand can be confusing. Buying a unit title property, such as an apartment or townhouse, means you automatically become part of a body corporate, but what does this mean for you?
Unit title ownership, also known as a ‘strata title’ or ‘stratum estate’, is most common in a building where there are multiple owners, like townhouses, units or apartments.
As a unit title owner, you own your apartment or unit outright and anything else listed in the record of title, such as garages, car parks and private outdoor areas. You also have an undivided share of the common property, such as lifts, lobby areas, driveways and shared gardens.
Owning a unit title means there are different obligations to your standard house and land ownership. They are governed by the Unit Titles Act 2010, which sets out the rights and responsibilities of a unit title owner, so that the group of units can be managed effectively.
Body corporates handle the management and maintenance of the building and property. Most day-to-day decisions of the body corporate can be made by a body corporate committee or with the agreement of 50% or more of the unit owners. Some decisions will require the agreement of 75% or more of the unit owners. The body corporate must hold an AGM (annual general meeting) at least once a year to discuss issues and vote on them.
You will usually pay an annual fee (a levy) to the body corporate, which will go towards budgeted body corporate expenses. The fee will include costs like insurance and management expenses (by an external contractor), contributing to a long-term maintenance fund (LTMF) and any services the body corporate arranges for its members (for example, rubbish collection and cleaning communal areas). Any body corporate costs that have not been included in the budget are also payable by the unit owners, usually by way of a special levy.
When buying a unit title, the seller must give you the following information about the unit and the body corporate before you buy:
The Ministry of Business, Innovation and Employment have a site called unittitles.govt.nz, which covers everything you need to know about unit titles, including unit owners’ responsibilities, how body corporates work, money and maintenance and a short guide to unit titles.
As with any property purchase, it’s wise to seek legal advice. Your lawyer or conveyancer can help you understand the body corporate rules – your obligations and what you can and can’t do with your apartment or townhouse.
Chatting to other unit, apartment or townhouse owners can be beneficial. Not only will they be able to give you their opinion on what it’s like to live at the property, but they will also be able to give you an owner’s perspective on how the body corporate functions – if it has been working well, if any works are outstanding or if there are matters that have not been logged in the body corporate meeting minutes.
When buying any property, it’s important that you do your homework. Here are some questions you may wish to ask when buying a unit title:
When buying a unit title property, it’s important that you have a clear understanding of what you’re committing to. Remember that you will be sharing common property and responsibilities with those around you.