The law governing the $50 billion apartment sector was reformed a few weeks ago, meaning big changes for thousands of people who own this type of property.
National's Nicola Willis was the MP in charge of The Unit Titles (Strengthening Body Corporate Governance and Other Matters) Amendment Act 2022.
That received royal assent on May 9.
The reforms aim to improve the information disclosure regime to prospective unit buyers, to strengthen the governance arrangements of a body corporate, to increase the professionalism and standards of body corporate managers and to ensure that planning and funding of long-term maintenance projects is adequate.
Willis said a new era had been ushered in, strengthening protection for existing and prospective apartment owners.
"The new fit-for-purpose Unit Titles Act gives a big green light to every New Zealander who previously may have hesitated to buy an apartment, but in future can do so with an enhanced foundation of rights and protections," Willis said on May 4.
Those considering buying an apartment or unit would get more information.
Professional governance and management requirements for body corporates had been strengthened and the change ensured that unit title developments adequately plan for, and fund, long-term maintenance projects, she said.
Willis paid tribute to her former National Party colleague and MP for Auckland Central, Nikki Kaye, "whose tireless work led to the initial drafting of this and its introduction as a member's bill".
Judith Collins was National's housing and urban development spokesperson and Kaye was Auckland Central MP and a former National deputy leader. They launched a petition urging the Government to reform deficient law governing the sector, denying buyers information about defects.
Collins said: "A huge project involving so many of us: Nikki Kaye, myself and then Nicola Willis. It certainly won't solve all problems but I'm pleased to have played my part."
Kaye said: "It has been a long road for this legislation with many dedicated people involved in law and property management personally donating their time to try to improve transparency and the quality of apartments.
"The legislation will, hopefully, help avoid some devastating situations for people when they are faced with unexpected maintenance bills."
Lawyer Thomas Gibbons said: "Know what you're getting into because you can be sure the seller knows what they're getting out of."
Gibbons has a special interest in body corporate law and wrote "Unit Titles Law and Practice". He says the reform is a big step but won't please everyone, particularly those who wanted proxy farming more tightly regulated.
Some people could be put off buying apartments. More people would be forced to reveal leaky building problems and more sales agreements could be cancelled, he thinks.
Sellers of unit titles must give buyers more information and their bodies corporate must keep better records.
Apartment buyers can delay or cancel contracts if they don't get enough information about what they're buying when they're considering it.
Demands that bodies corporate have 10-year long-term maintenance plans have now been strengthened to make them 30 years. That is for large blocks with 10 or more units.
Bodies corporate must now keep records of meetings and decisions so everyone can see what is going on. The powers of the Ministry of Business, Innovation and Employment have been strengthened.
Residential unit title properties are typically apartment blocks and townhouses.
"Unit titles are not just about ownership or a type of tenure but also about how people live and work together, make decisions, regulate each other, resolve issues and what bills they pay," Gibbons said.
But the issues are not just financial: they are about individual autonomy, communal interests and how people work through issues of right, wrong and in between, he said.
Gibbons said the reform made significant changes.
Anyone selling a unit would find the need for more disclosure, particularly around weather-tightness issues and body corporate records. Buyers could face more legal costs because they'll want their lawyer to go over that disclosure information.
The consequences of getting disclosure wrong, incomplete or inaccurate have been expanded. Expect to see more agreements getting cancelled for failure to disclose properly, he says.
Committee members need to be aware that while it's usually a voluntary role, there's a new code of conduct, requiring a commitment to knowing the act and regulations and complying with them.
The good news for owners is there is a greater ability to hold committee members accountable, especially for conflicts of interest. The conflicts of interest register will make some people think twice, Gibbons said.
Every management agreement will need to be reviewed. Body corporate managers have greater accountabilities – but are much more the meat in the sandwich as well.
The Ministry of Business, Innovation and Employment has stronger powers including the ability to issue improvement notices and to seek pecuniary penalty orders. How well these work will really depend on how well the ministry is resourced, Gibbons said.
The Tenancy Tribunal also has an increased jurisdiction to $100,000, as well as lower application costs so it will hear more cases, Gibbons forecasts.
"There are a few places where the amendment act clarifies the law. But there is a real danger that these clarifications get treated as changes when this is not intended.
"There is a lot for owners, managers, committee members and lawyers to think about and keep track of."
Stats NZ record housing consents data shows more apartments and townhouses are gaining consents.
In December, the Resource Management Act was amended which brought forward and strengthened the National Policy Statement on Urban Development to increase housing supply in major urban areas.
Rising land and house price rises and the Auckland Unitary Plan are other factors driving record numbers.
Apartments and townhouses are usually sold as unit titles, or sometimes cross-leased, so more New Zealanders will be affected by the Unit Titles Act law change.
In 2016, Auckland was estimated to have about 45,000 to 50,000 residential multi-unit apartments which are home to more than 100,000 people. The late David Watt found 58,470 titles run by the 5523 bodies corporate.
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