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Key things to look out for when selling a Unit Titled Property
Claire Tyler, Rainey Collins Lawyers
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An investor owned an apartment in a complex of 4 unit titled apartments, which they contacted a real estate agent about selling. The agent asked them for contact details and information about the Body Corporate, including levies and insurance.
The investor was adamant that because their complex was a small complex, and had a ‘non-functioning Body Corporate’, any disclosure rules did not apply to them when it came to selling their unit.
The agent wasn’t sure what exactly was required in terms of disclosure when there is no ‘functioning’ Body Corporate, so sought legal advice.
The legal position here is clear. There is no such thing legally as ‘non-functioning Body Corporate’, and all the same disclosure rules apply to smaller Bodies Corporate as larger ones.
Key things Bodies Corporate must do
All unit titled properties, no matter how small or large the development is, are governed by the Unit Titles Act 2010. All unit owners in a unit titled development make up the Body Corporate.
The key things, as an absolute minimum, that a Body Corporate should do is:
1. Maintain a register of all unit owners;
2. Have an operating account into which levies are paid (which at the very least, should cover insurance costs);
3. Ensure the development is insured under one insurance policy (noting there is an exception if units are not attached to each other, where the Body Corporate can insure separately if it passes a special resolution confirming this);
4. Manage and maintain common property;
5. Have a Long Term Maintenance Plan in place; and
6. Provide disclosure statements when a unit owner is selling their property.
The only thing that a smaller Body Corporate is exempt from under the Act is the requirement to have a Body Corporate committee. A committee is a smaller group of owners which the Body Corporate has delegated certain responsibilities to.
Any Body Corporate with 9 or fewer units does not need to have a Body Corporate committee.
If there is no committee or no nominated chairperson of the Body Corporate, then all owners need to sign all documents on behalf of a Body Corporate.
Disclosure regime
When selling a unit titled property there are requirements under the Act for the Vendor to provide the Purchaser with:
A Pre-Contract Disclosure Statement,
A Pre-Settlement Disclosure Statement,
Insurance details, and
An additional disclosure statement, if requested by the Purchaser.
It is important to be aware that this disclosure regime is separate from any more general disclosures that real estate agents will require when listing a property.
Vendors still need to disclose to their real estate agents any known defects, and the agent is required to point out any defects or likely defects that they should know in their experience as an agent.
Pre-Contract Disclosure Statement
When selling the property the Vendor needs to provide (and sign) a Pre-Contract Disclosure Statement to purchasers. There is a template statement on the Tenancy Services website, which may assist if the Body Corporate does not know how to prepare the statement.
There is a specific list of items that need to be included in the statement, as detailed in the Unit Titles Regulations.
Pre-Settlement Disclosure Statement
The Vendor is required to provide the Purchaser with a certificate of insurance and a Pre-Settlement Disclosure Statement no later than five working days before settlement.
A Pre-Settlement Disclosure Statement is also signed by the Vendor, but is required to be accompanied by a certificate from the Body Corporate confirming the contents of it are correct. If there is no chairperson or committee, this statement will need to be signed by all owners.
It could be difficult to get all owners to sign, so enquiries
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Richard Hemi, University of Otago
In the 60th year of the School of Surveying, it would seem an appropriate time to reflect on surveying education; then and now. Over the course of those years, the school has changed significantly – it has grown in student and staff size, it has moved building twice, its curriculum has evolved and the school can now proudly count over 2000 surveying graduates.
Surveying has been taught at University of Otago since the 1880s when papers in surveying were offered as part of the degree in mining courses offered by the Otago School of Mines. It was from this mining department that the School of Surveying grew thanks to the hard work of Professor John Mackie and other prominent NZIS stalwarts of that time, including Archie Bogle and others.
The autobiography of John Mackie provides an interesting chapter on the creation of the current School of Surveying, and in it, he describes the benefit of acquiring new equipment to improve teaching – a number of plane tables. In a similar vein, the school has recently enjoyed a new influx of total stations and robotic equipment, greatly enhancing student learning in the 2020s. Many things have obviously changed since those early days – instruments, computing, survey methods but some things remain the same. In the 1960s, survey camps were held at Tirohanga, a small Bible Class hall in the hills behind Mosgiel. In Prof Mackie’s words, running the camp “involved administration resembling an army exercise”. I’m sure my camp colleagues’ would heartily agree with those comments in 2023, after catering for our biggest student cohort ever taken away to camp this year – 74 students.
Ironically, as I have written about in a previous article, our new camp at Orangapai in the Maniatoto is also a Bible or Christian camp. No doubt out of respect for the ethos of his Taieri camp, Mackie and his students “would all call into one of the Mosgiel pubs on the way back to Tirohanga”, whereas at Orangapai we pack out the Waipiata pub for our last evening at camp.
In 1973 Joanne Waugh became the first female student to enrol at the school, completing a surveying diploma. Around this time the school was considering the adoption of a four-year degree course with the first intake in 1976, and five years later, Vicky Nalder (former Chair of the CSLB) became the first female to graduate with the new BSurv degree.
The first pro camp of 2023 included 13 female students, an increase certainly, but our overall female class percentages continue to lag behind what we as an industry should aspire to. The staff numbers at the school are somewhat better with the department currently employing five female staff members across the 17 roles.
Some of this historical information comes from an S+SNZ Quarterly article written by Mark Smith in 2013 at the time of the 50th anniversary. In it he highlights the introduction of a new curriculum in 1994 which involved the introduction of first year papers undertaken at Otago. Previously students could do the intermediate year at any university in New Zealand with general maths and physics papers. I have fond memories of my intermediate year at Waikato University, before arriving at Survey
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(continued from page 42) may need to be made very early in the piece to avoid settlement potentially being delayed as mentioned below.
This Pre-Settlement Disclosure Statement includes information regarding the levies that will be apportioned on settlement, and other details relevant to the purchase.
It is worth noting that, under the Agreement for Sale and Purchase, only ordinary levies are apportioned on settlement, not Long Term Maintenance, Contingency or Capital Improvement fund levies. Vendors will not get back a share of what they have contributed to any such funds over time.
It is also important to be aware that the Agreement can be delayed or cancelled if this statement is not provided within 5 working days of settlement.
Deposit
It is important to remember that when selling a unit titled property, the agent is required to hold the deposit until the Pre-Settlement Disclosure Statement and Additional Disclosure Statement (if requested) have been provided, as there is a right for the Purchaser to cancel prior to those statement being provided.
An update...Unit Titles (Strengthening Body Corporate Governance and Other Matters) Amendment Bill
This Bill, currently passing through Parliament, seeks to update the Unit Titles Act and rectify some known problem areas. The Bill has passed its Third Reading and is expected to be considered again in May.
Key things that the Bill will change are:
Adding additional items to be provided under a Pre-Contract Disclosure Statement and some other changes to the disclosure regime;
Greater accountability for Body Corporate managers, who will be defined in the Act and will be subject to a code of conduct;
A reduction in the fees for applying to the Tenancy Tribunal in the event of a dispute;
Permanent ability to hold meetings via audio-visual link and vote electronically.
Summary
Sales of Unit Titled properties are more complex for all involved than fee simple sales, so it pays to know what to look out for and what is required, to avoid settlements being delayed or cancelled. •
(continued from page 43)
School camp to enjoy Ted Friel’s draughting instruction and Allan Blackie’s plumbing lessons at the Invermay Research farm.
This year we again introduce a new curriculum to the BSurv with new papers in that first intermediate year. As discussed in the last edition of this article, one of those new first year papers is SURV130: People, Place and the Built Environment. This paper aims to highlight the connection between people and land, provide students with an appreciation of Māori values to land, and introduce the main components of sustainability and climate change science – all very important topics in this age and in light of the recent damaging weather events in the North Island.
A better understanding of these issues, together with a change in the attitudes toward urban design and the development of land has been reflected in the changes to the associated papers in the BSurv course over time. In Professor Lex McRae’s Subdivisional Design booklet of the 1980s, I found that it was recommended that “in general, all watercourses be piped in the design of a new subdivision”. This is something that has certainly changed in teaching with a much greater focus on ecology and the function of natural drainage systems, and an understanding of the aesthetic and cultural value of the natural environment in our neighbourhoods.
In Mark Smith’s article, he reminisced about the school’s single Vax computer located in the windowless room known as the ‘Black Hole’. The school now has two large computer suites with over 80 computers between them. The school enjoys great support from a number of industry software suppliers and, because of this, students are familiar with and have the ability to become well versed in a number of typical survey computation and design processes. What all employers must accept however is that like all surveying theory taught at the school, students receive an introduction to a range of skills as part of course teaching objectives but with a limited amount of practice.
Like almost all teaching they require a graduate to spend more time repeating these skills in a continued real life practice for them to become individually competent. This partnership between undergraduate theory and postgraduate practice to achieve the desired level of expertise has certainly not changed from ‘then to now’. •
