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Unit Titles Bill – Something For Everyone

By Richard Smith & Paul Calder

It is no secret within the property industry that the Unit Titles Act  is outdated and in need of reform.  A review has been under way for some time, culminating in the introduction of the Unit Titles Bill, which is still before Parliament.  What will it mean for you?

Property owners

• A chance to review the structure of your unit title development on a number of fronts including, unit entitlements, rules, layered developments etc.
• An opportunity to be an early adopter with a view of increasing the desirability of your unit title development. Anecdotal evidence suggests developments, which make provision for proper governance and financial management can increase in value.
• Looking at historical barriers presented by the Act in respect of easements, covenants and access ways to see if they would still apply if the Bill was enacted.
• Making sure personal contact details held on the register are accurate and up to date.

Developers

• Reviewing current disclosure practices including determining what funds will be adopted.
• Revisiting staging of developments and contribution requirements.
• Reviewing the proposed structures being used and looking at whether layered developments provide a viable alternate.
• Determining what considerations will start to form the basis for setting the utility entitlements.
• Implementing formal systems for a handover of property and construction related material to the body corporate.

Landlords and Tenants

• Reviewing who will contribute to what funds and how those contributions are to be made and if applicable refunded on termination or assignment.
• Looking at the breadth of powers vested in the Tribunal for breaches to the rules and the impact of tenant breaches.

Body Corporate Managers

• Looking at the transitional implications if the Bill is adopted.
• Undertaking a system review to facilitate the adoption of multiple fund models.

Quantity Surveyors

• Introduction of 'sinking fund' style plans for long term capital payments in other jurisdictions have generally been carried out with the assistance of quantity surveyors.
• Offering assistance in setting utility interests, as we see quantity surveyors may have a significant part to play in modelling this process.

Conclusion 

Although the Bill will clearly not be passed in this Parliamentary term, it seems clear that a review of the 1972 legislation is necessary and the new Act is likely to be passed in the next term.  Some in the property industry will be affected greatly by it – the key is to be prepared so that there are not undue delays in property transactions and developments caused by uncertainty relating to the new legislation.

Richard Smith and Paul Calder are partners, specialising in property, in the Christchurch office of Duncan Cotterill. They are part of Duncan Cotterill’s property projects team, which works exclusively in this ever-changing area. R.smith@duncancotterill.com; p.calder@duncancotterill.com

This update is intended to provide accurate general information. The contents do not constitute legal advice and should not be relied on as such.