Part 2
Unit title developments
Subpart 1—Subdivision of land to create unit title development
Subpart 1 deals with the subdivision of land to create a unit title development.
Clause 8 provides that the following persons may subdivide land to create a unit title development:
the registered proprietor of an estate in fee simple in a parcel of land under the Land Transfer Act 1952:
the registered proprietor of an estate as lessee under a memorandum of lease registered under that Act in respect of a parcel of land:
the registered proprietor of an estate as lessee or licensee under a lease or licence from the Crown registered under that Act in respect of a parcel of land.
The land may be subdivided into principal units, accessory units, and common property.
Subdivision of subleasehold land to create a unit title development is not permitted.
Clause 9 provides that the subdivision is effected by the deposit (by the registered proprietor) of a unit plan. The unit plan must specify the units in relation to a building or buildings already erected on the land. In accordance with the definition of principal unit in clause 4, each principal unit must contain a building, or be contained in a building.
Clause 10 sets out certain restrictions on the deposit of a unit plan to subdivide land. A unit plan can not be deposited—
if the computer register for the land is limited as to description of parcels or as to title under Part 12 of the Land Transfer Act 1952:
unless the land is the whole of the land in a single computer register:
until the unit plan is approved as to survey:
unless the grantor of the lease or licence (if the land is held that way) or any mortgagee, chargeholder, or caveator in relation to the land has consented:
unless the local authority certifies that erection of buildings on the land and other development work is complete to the extent necessary to enable boundaries of units and common property to be measured:
unless a certificate has been given by a registered valuer showing the ownership interest fixed for each unit (see clause 28).
Clause 11 sets out the grounds on which a territorial authority may refuse to give a certificate as to the completion of buildings and other development work for the purpose of clause 10.
Clause 12 provides that once a territorial authority has given a certificate as to the completion of buildings and other development work for the purpose of clause 10 the territorial authority—
has no power to require any alteration to anything in the development that may affect the boundaries of any unit or the common property:
may pursue any remedies it has for breach of the district plan or the Resource Management Act 1991.
Clause 13 protects (except in the case of bad faith) a territorial authority (and its employees etc) from civil and criminal liability in respect of the giving of a certificate as to the completion of buildings and other development work for the purpose of clause 10.
Stratum estate created when unit plan deposited
Clause 14 sets out the nature of the legal title created when a unit plan is deposited. Each unit in the development has, created in it, a stratum estate - in freehold or leasehold (depending on the title that the registered proprietor of the land had). That stratum estate is made up of—
the freehold or leasehold estate in the unit itself:
the unit owner's beneficial interest in the common property owned by the body corporate for the unit title development (see clause 44):
the undivided share in all the units together to which the owner is entitled if the unit plan is cancelled.
Subpart 2—Subdivision of principal unit to create unit title development: layered developments
Layered developments are not provided for in the Unit Titles Act 1972. An example of a layered development is where a building making up a principal unit within an existing unit title development is subdivided to create 2 or more principal units within it (and also possibly accessory units and common property as well). The Bill provides that this subdivision of the principal unit under this subpart creates a new unit title development and consequently a new body corporate to govern it. The new unit title development is referred to as a subsidiary unit title development. The original unit title development that contains the subdivided principal unit is referred to as a parent unit title development. The principal unit that was subdivided remains a principal unit within the parent unit title development.
It is possible under the Bill for a principal unit in a subsidiary unit title development to be further subdivided to create another subsidiary unit title development (see examples 2 and 3 in Schedule 1).
The subdivision of a principal unit to create a new unit title development is different from a redevelopment within a unit title development (see subpart 9 of Part 2) where a principal unit is subdivided into 2 or more new units.
Clause 15 defines a layered unit title development. A layered unit title development is made up of the head unit title development (that is, the unit title development that was created by the subdivision of land) and all the unit title developments that are derived from any principal unit in that head unit title development. See examples 2 and 3 in Schedule 1. All the unit title developments shown in example 2 are a layered unit title development. All the unit title developments shown in example 3 are a layered unit title development.
Clause 16 provides that the owner of a principal unit (that has no accessory unit) may subdivide that unit to create a further unit title development - a subsidiary unit title development.
Clause 17 provides that the subdivision of the principal unit is effected by the deposit (by the owner of the principal unit) of a unit plan.
Clause 18 provides that some of the restrictions on deposit of a unit plan that apply to the subdivision of land (see clause 10) also apply in relation to the subdivision of a principal unit.
Stratum estate created when unit plan deposited
Clause 19 sets out the nature of the legal title created when a unit plan for the subdivision of a principal unit is deposited. Each unit in the resulting subsidiary unit title development has, created in it, a stratum estate - in freehold or leasehold (depending on the title that the owner of the principal unit being subdivided had). That stratum estate is made up of—
the freehold or leasehold estate in the unit itself:
the unit owner's beneficial interest in the common property of the subsidiary unit title development (see clause 44):
the undivided share in the subdivided principal unit to which the owner is entitled if the unit plan is cancelled.
Subsidiary body corporate treated as owner of subdivided principal unit
Clause 20 provides that a subsidiary body corporate is to be treated as the owner of the principal unit that was subdivided to create the subsidiary unit title development.
Subpart 3—Creation of unit title development in stages
Clause 21 provides that a subdivision of land, or a principal unit, to create a unit title development may be done in stages. The Unit Titles Amendment Act 1979 provided for staged development of unit title developments. The ability to create a subsidiary unit title development in stages is new.
Clause 22 provides that successive plans are required to be deposited for a staged development as follows:
The staged unit plan or plans will show one or more future development units within the development. These are units that are not fully developed as principal and accessory units as yet. A single future development unit may show more than 1 proposed unit within it. A principal unit shown within a future development unit is referred to in the Bill as a proposed principal unit.
The owner of a future development unit is not a member of the body corporate for the unit title development but is treated as a member for certain purposes (see clause 63). A future development unit is generally not treated as a principal unit but there are exceptions to this (see clause 106 for example).
Clause 23 deals with the situation where territorial authority planning requirements change between the deposit of a proposed unit plan and the completion of the relevant part of the development. It is sufficient if the completed part of the development as shown on a stage unit plan complies with the territorial authority requirements as they were when the proposed unit development plan was deposited.
Clause 24 provides that once a proposed unit development plan has been deposited it must not be altered unless by special resolution of the body corporate. The process for minority members of the body corporate to object (see clauses 192 to 195) applies.
Clause 25 sets out the nature of the legal title created in a future development unit. Each future development unit has, created in it, a stratum estate - in freehold or leasehold (depending on the title that the registered proprietor of the land, or the owner of the principal unit, had). That stratum estate is made up of—
the freehold or leasehold estate in the future development unit itself - which ends when the unit becomes 1 or more principal units and accessory units or if the unit plan is cancelled:
the undivided share in all the units to which the owner is entitled if the unit plan is cancelled.
Clause 26 provides that section 11 and Part 10 of the Resource Management Act 1991 do not apply to the deposit of a stage unit plan or a complete unit plan except for the requirement to obtain a certificate under section 224(c) of that Act. The requirement to obtain this certificate is not necessary if it has already been affixed to the proposed unit development plan. A reference to an approval of the survey plan under section 223 of the Resource Management Act 1991 in the certificate is to be treated as approval of the proposed unit development to which the plan relates.
Clause 27 deals with stage unit plans and the requirement for a certificate under section 224(c) of the Resource Management Act 1991. This varies the obligations on the territorial authorities under that section. Under section 224(c) of that Act a territorial authority is obliged to ensure all conditions of subdivision consent are complied with unless bonding arrangements are in place. This clause enables the territorial authority to issue a certificate if it is satisfied that outstanding conditions of a subdivision consent will be met at a later date that is before or when a request for certification of a later stage unit plan or complete unit plan is made.
Subpart 4—Ownership interest and utility interest
Clause 28 requires an ownership interest to be assigned to every principal unit and accessory unit and every proposed principal unit and accessory unit before a unit plan is deposited. The clause sets out how the ownership interest or proposed ownership interest is to be fixed and includes a list of some of the matters that the ownership interest is used to determine. The proposed ownership interest is used to determine the utility interest of a future development unit. Changes to the ownership interest of any unit may only be made if there is a reassessment of the interest under clause 31 or, in the case of a redevelopment, under clause 57(3).
Clause 29 requires a utility interest to be assigned to every principal unit and accessory unit before a unit plan is deposited. This clause applies to utility interests assigned to principal units that are not future development units. The utility interest is the same as the ownership interest unless it is reassessed under clause 31. The clause includes a list of some of the matters that the utility interest is used to determine. These matters relate generally to obligations on the part of the principal unit owner.
Clause 30 applies to utility interests for future development units. It requires a deemed utility interest to be assigned to a future development unit as soon as the unit is used as a place of residence or business or otherwise. The deemed utility interest is either the total of all the proposed ownership interests of the principal units and accessory units in the future development unit or an amount fixed by the body corporate. It is used to determine the extent of the future development unit owner’s obligations in respect of contributions relating to funds.
Clause 31 provides for the reassessment of ownership and utility interests. The body corporate may by special resolution decide to reassess either of the interests but a decision to reassess the interests may only be made if 36 months have elapsed since the last reassessment. When a unit plan for a subsidiary unit title development is deposited the ownership interest and utility interest of the head unit title development and every parent unit title development must be reassessed. If a unit plan is about to be cancelled then the ownership interest of each unit must be reassessed immediately before that cancellation. Costs incurred for a reassessment must be paid by the body corporate.
Clause 32 provides that the body corporate must notify the Registrar of any reassessment and this must be recorded by the Registrar on the supplementary record sheet.
Subpart 5—Computer registers, etc
Clause 33 provides for the creation of a computer register when a unit plan is deposited for the subdivision of land to create a unit title development. Provision is also made for the Registrar to create a separate computer register for any principal unit or future development unit on the request of a registered proprietor and that computer register may include 1 or more accessory units.
Clause 34 provides for the creation of a computer register when a unit plan is deposited for the subdivision of a principal unit to create a subsidiary unit title development. Provision is also made for the Registrar to create a separate computer register for any principal unit in the subsidiary unit title development on the request of the owner of the principal unit that has been subdivided.
Clause 35 provides that separate computer registers may not be created under the Land Transfer Act 1952 for base land, a subdivided principal unit, or component parts of a stratum estate.
Clause 36 provides that a computer register must not be created in respect of common property.
Clause 37 provides for the setting up of supplementary record sheets by the Registrar on the deposit of a unit plan. Supplementary record sheets must be filed in the same manner as a computer register.
Clause 38 provides that the Registrar must note the subsidiary unit title development on the supplementary record sheet for each unit title development of which it is a part.
Clause 39 provides that when a new unit plan is deposited a note must be made on that plan to show clearly that is in substitution for an earlier plan. All references to a unit described in any computer register or any other instrument relating to land are to be read as referring to the plan for the time being deposited in respect of that land.
Subpart 6—General provisions relating to dealings with unit title developments
Clause 40 sets out the ways in which the stratum estate in a unit may be dealt with. For example, the unit may be sold or mortgaged. Generally, the component parts of the stratum estate in a unit can not be dealt with separately. For example, the unit owner's beneficial interest in the common property cannot be dealt with separately. The exceptions to this are the powers of a body corporate to deal with the common property in certain ways (see clauses 45, 47, and 50).
The fee simple estate, or interest as lessee or licensee, in the base land cannot be dealt with at all.
Clause 41 provides that, regarding a subsidiary unit title development, the principal unit from which it was created cannot be dealt with at all.
Clause 42 provides that a transfer, lease, mortgage, or settlement of a stratum estate in a unit has the same effect as if the stratum estate were an estate in fee simple in land or an interest in land under a lease or licence, as the case may be.
Clause 43 sets out restrictions on dealing with an accessory unit independently of a principal unit. Generally, an accessory unit can only be dealt with as part of a transaction that includes a principal unit. The exception is if the accessory unit is transferred to the owner of another principal unit. An accessory unit does not have its own computer register. It is included in a computer register for a principal unit.
Subpart 7—Ownership of, and dealings with, common property
Clause 44 provides that the common property is owned by the body corporate for the unit title development. The owners of units have a beneficial interest in it. This is different to the position under the Unit Titles Act 1972 where the unit owners own the common property as tenants in common.
Clause 45 provides that the body corporate may grant a lease or licence over the common property. There are certain additional consent requirements (consent of the parent body corporate etc) if the body corporate is a subsidiary body corporate.
A body corporate, other than a subsidiary body corporate, may sell part of the common property.
A special resolution of a body corporate is required in order to sell, or grant a lease or licence over, common property. The process for minority members of the body corporate to object (see clauses 192 to 195) applies.
Clause 46 provides for the registration of transfers of the common property.
Clause 47 provides that the body corporate may acquire an interest in land that is outside the base land. A special resolution of a body corporate is required to acquire the interest in land. The process for minority members of the body corporate to object (see clauses 192 to 195) applies. This clause provides that land transferred (unencumbered by any mortgage etc) to the body corporate may be included in the common property. This clause provides for the registration of the transfer.
Subpart 8—Easements, covenants, and access lots
Existing easements and covenants affecting base land
Clause 48 provides that the deposit of a unit plan has no effect on any easement or covenant to which the base land is subject or on any easement or covenant that is appurtenant to the base land.
Clause 49 provides that a body corporate, other than a subsidiary body corporate, may vary, surrender, or assign any easement, or vary or revoke any covenant, to which clause 48 applies. The Unit Titles Act 1972 does not provide for dealings with existing easements and covenants.
Creation of new easements and covenants
Clause 50 provides for the ability of a body corporate to grant or acquire easements and enter into covenants over or for the benefit of common property. The Unit Titles Act 1972 does not provide for dealings of this kind. A special resolution of a body corporate is required under this clause. The process for minority members of the body corporate to object (see clauses 192 to 195) applies.
Clause 51 provides for the ability of a principal unit owner to grant or acquire easements, enter into covenants, and acquire the benefit of covenants in relation to the unit. This replaces but is also more extensive than section 4(3A) of the Unit Titles Act 1972.
Access lots
Clause 52 applies if the registered proprietor of land who subdivides it to create a unit title development is the owner, or part owner, of an access lot (see clause 5) providing access to the unit title development. This clause provides that the access lot becomes the property of the body corporate when the unit title development is created.
Clause 53 provides that the body corporate may acquire the whole, or a share, of an access lot. A special resolution of a body corporate is required under this clause. The process for minority members of the body corporate to object (see clauses 192 to 195) applies.
Clause 54 provides that an access lot is treated as common property for certain purposes (for example, body corporate operational rules can apply to it).
Clauses 52 to 54 have no equivalent in the Unit Titles Act 1972.
Subpart 9—Redevelopments
There are 2 types of redevelopment (as that term is defined in clause 5) of a unit title development. One type requires an amendment to the existing unit plan, and the other requires a new unit plan.
Redevelopment requiring amendment to unit plan
Clause 55 relates to a redevelopment requiring an amendment to the unit plan. This is a redevelopment where the boundaries between 1 or more units are adjusted but the adjustment does not materially affect the common property or the other units in the development. This clause sets out the requirements for consent of unit owners and for depositing an amendment to the unit plan. This category of redevelopment requiring only an amendment to the unit plan is new. Under section 44 of the Unit Titles Act 1972 all redevelopments required the deposit of a new unit plan.
Redevelopment requiring new plan
Clause 56 applies to all redevelopments not covered by clause 55. The body corporate must apply for the deposit of a new unit plan in substitution for the existing unit plan. A special resolution of the body corporate is required. The process for minority members of the body corporate to object (see clauses 192 to 195) applies. In addition, all owners of the units materially affected by the redevelopment must consent in writing. These requirements are different to those under section 44 of the Unit Titles Act 1972.
Clause 57 sets out the requirements for the new plan.
Clause 58 sets out requirements relating to how the Registrar-General of Land must register the redevelopment.
Subpart 10—Miscellaneous provisions relating to creation of, and dealings with, unit title developments
Clause 59 provides that, generally, the Land Transfer Act 1952 applies to stratum estates and dealings with them.
Clause 60 sets out the incidental rights to the base land that are appurtenant to the common property and each unit. Examples are rights of support or shelter, rights for passage or provision of water or sewerage, rights of access to light, and rights to maintain overhanging eaves.
Both clauses 59 and 60 replace existing provisions in the Unit Titles Act 1972.
Scheme following destruction or damage
Clause 61 applies if any building or other improvement comprised in any unit or on the base land is damaged or destroyed but the unit plan is not cancelled. (If the unit title development concerned is a subsidiary unit title development note the definition of base land in clause 15(2)).
The application to the court for a scheme may be made by—
the body corporate:
if the unit title development is in a layered unit title development, the body corporate for any of the other unit title developments in the layered development:
an administrator (see clause 125):
the owner, or 1 of the owners, of a unit:
a registered mortgagee of a unit.
This clause replaces, with some modification, section 48 of the Unit Titles Act 1972.
Subpart 11—Management structure and arrangements
Establishment and constitution of body corporate
Clause 62 provides that a body corporate is created on the deposit of a unit plan. In the case of a staged development the body corporate is created on the deposit of the first stage unit plan.
Clause 63 provides that the members of a body corporate are the unit owners of all the units in the unit plan. This does not, however, include owners of future unit title developments. They are only members of the relevant body corporate for certain limited purposes prescribed in the Bill.
Clause 64 provides that a body corporate ay do anything authorised by the Bill or by any other Act.
Clause 65 provides that a body corporate may do anything a natural person of full age and capacity may do, except as otherwise provided in the Bill or any other rule of law.
Clause 66 limits the acts that a body corporate may do. Any act done by a body corporate must be for the purpose of performing its duties or exercising its powers.
Rights and responsibilities
Clause 67 sets out the rights of owners of principal units.
Clause 68 sets out the responsibilities of owners of principal units.
Clause 69 sets out the responsibilities of an absent owner of a principal unit who is leasing the principal unit and is, or intends to be, absent from the country for more than 3 weeks. The owner must appoint a representative (unless the lease is a residential lease and the owner has already appointed a representative under the Residential Tenancies Act 1986) and give the body corporate the contact details of the representative. The representative has the power to enforce the body corporate rules. If no representative is appointed or the representative fails to enforce the rules then the body corporate may enforce them.
Clause 70 sets out the requirements relating to consent by a subsidiary body corporate to additions or structural alterations. The subsidiary body corporate may only consent to certain additions or structural alterations to any principal unit in the subsidiary unit title development if it has obtained written consents from its head body corporate and every other parent body corporate located between it and its head body corporate. Consent may not be unreasonably withheld. Consent must be given if the proposed alteration or structural alteration does not involve changes to the boundaries of the subsidiary unit title development or does not have a material impact on the use or amenities of the parent or head unit title developments.
Clause 71 sets out the rights and responsibilities of owners of principal units in subsidiary unit title developments. These unit owners have the same rights of access and enjoyment of the common property of the parent unit title developments and the head unit title development as if they were a subsidiary body corporate owner in those unit title developments.
Powers and duties of body corporate
Clause 72 provides a summary of the powers and duties of bodies corporate. These powers and duties do not apply in respect of a future development unit unless expressly stated elsewhere in the Bill.
Clause 73 provides that a body corporate must keep and maintain a register of owners of principal units and accessory unites in accordance with the regulations. A principal unit owner is required to notify the body corporate of any changes in the information held in the register that relates to is or her unit. In the event that the ownership of a unit is transferred to another person until the body corporate is notified in writing of the transfer, the principal unit owner remains liable to the body corporate for all levies raised on his or her unit and the person to whom the unit is being transferred is not entitled to exercise any voting rights except at a general meeting of the body corporate with the consent of the other principal unit owners at that meeting.
Clause 74 applies to unit developments on leasehold land. This clause provides that the body corporate must pay the ground rental to the lessor before making any other payments.
Meetings and voting
Clause 75 provides that all body corporate meetings are general meetings and that a general meeting is either an annual general meeting or an extraordinary general meeting.
Clause 76 sets out the requirements for annual general meetings. The first annual general meeting must be held either within 3 months after the date of the deposit of the unit plan or after the date of settlement of the first sale of a unit. The chairperson must be elected at the first annual general meeting. Subsequent annual general meetings must be held every calendar year and no later than 15 months after the previous annul general meeting.
Clause 77 provides that the annual general meeting must be called by the chairperson. Extraordinary general meetings must be called by the chairperson if a notice requesting a meeting is given to the chairperson and signed by or for the unit owners of 20% of the units. Otherwise an extraordinary general meeting may be called at any other time by the chairperson or the body corporate committee.
Clause 78 provides for general meetings of parent bodies corporate or their committees. A parent body corporate or its committee may give notice of a general meeting to each of its subsidiary bodies corporate. The notice must be made in accordance with the regulations. Failure to give proper notice means any vote on a resolution is void.
Clause 79 provides for general meetings of a subsidiary body corporate or subsidiary body corporate committee in advance of meetings of its parent body corporate or parent body corporate committee. At the meeting, the subsidiary body corporate or its committee must consider the matters on the agenda of the parent body corporate or the parent body corporate’s committee. Any matter on the agenda relating to a motion to be decided by ordinary resolution must first be decided by ordinary resolution at the meeting of the subsidiary body corporate or its committee. If the matter on the agenda relates to a motion to be decided by special resolution then it must first be decided by special resolution at the meeting of the subsidiary body corporate or its committee. If the motion is passed at the meeting then the subsidiary body corporate or subsidiary body corporate committee may direct its representative to vote in favour of the motion at the parent body corporate or parent body corporate committee meeting. If the motion fails then the subsidiary body corporate or subsidiary body corporate committee must direct its representative to vote against the motion at the parent body corporate or parent body corporate committee meeting. However, the subsidiary body corporate or its committee may direct its representative to abstain from voting on any matter on the agenda if has passed a motion deciding to abstain.
Clause 80 provides that a subsidiary body corporate must appoint a person to represent it (a subsidiary body corporate representative) at meetings of its parent body corporate or its committee. Written notice of the appointment must be given to the parent body corporate and the parent body corporate is entitled to rely on that notice.
Clause 81 sets out the duties of the subsidiary body corporate representative.
Clause 82 provides that the persons entitled to exercise the voting power in respect of not less than 25% of the principal units or their proxies constitutes a quorum. If the body corporate contains 2 or more people a quorum must be at least 2 people. No business may be transacted at a general meeting unless a quorum is present at the time.
Clause 83 sets out the eligibility requirements for voting at a general meeting of a body corporate. Even if a person is eligible to vote he or she may not vote unless all rates, taxes, charges, body corporate levies, and other outgoings payable have been paid.
Clause 84 provides for the counting of votes for an ordinary resolution. One vote only may be exercised for each principal unit. An ordinary resolution is passed if a majority of the eligible voters who vote on the resolution vote in favour.
Clause 85 provides for the counting of votes for a special resolution. One vote only may be exercised for each principal unit. A special resolution is passed if 75% of the eligible voters who vote on the resolution vote in favour. Even if a special resolution is passed it is still subject to a request for a poll.
Clause 87 provides for the counting of votes if a poll is requested. One vote only may be exercised for each principal unit and only those who voted on the original motion are entitled to vote. For the motion to pass 75% of the ownership interest represented by those voting must vote in favour. The result of any poll is the result of the general meeting.
Clause 88 provides that matters at a general meeting of a body corporate that relate to an exercise of a duty or power may not be delegated under clause 93(2) or that have not been delegated to a body corporate committee must be decided by special resolution. All other matters must be decided by ordinary resolution.
Clause 89 provides for voting by proxy.
Clause 90 provides for postal voting.
Body corporate operational rules
Clause 91 provides that the body corporate operational rules are the rules prescribed by regulation subject to any alterations to those rules that are deposited with the unit plan. Subject to certain limitations, these rules may be amended, revoked, or added to at any time after the unit plan has been deposited. The body corporate operational rules are binding on the body corporate, principal unit owners and any person occupying a principal unit.
Clause 92 deals with conflicts between subsidiary body corporate operational rules and those of its parent or head body corporate. Generally, the parent body corporate operational rules and the head body corporate operational rules prevail.
Delegation
Clause 93 provides that a body corporate may delegate its powers and duties to a body corporate committee except those listed in subclause (2). The delegation may be general or specific.
Clause 94 provides that the body corporate committee may, unless provided otherwise in the delegation, exercise the delegated duties and powers in the same manner and subject to the same restrictions and with the same effect as the body corporate. The body corporate cannot further delegate any of the delegated duties and powers.
Clause 95 provides that a delegation does not affect or prevent the performance of any duty or the exercise of any power by the body corporate or affect its responsibilities for the actions of the body corporate committee acting under the delegation.
Clause 96 provides for the revocation of a delegation.
Body corporate committees
Clause 97 provides that if a unit title development consists of 9 or fewer principal units then it may form a body corporate committee. For unit title developments of more than 9 principal units, a body corporate committee must be established.
Clause 98 provides that decisions of a body corporate committee be made by majority.
Clause 99 requires a body corporate committee to report to the body corporate on the exercise of its powers.
Subpart 12—Financial and property management
Long-term maintenance plan, funds, and ancillary matters
Clause 100 provides that a body corporate must establish and maintain an operating account to meet certain operating expenses. It must also establish a bank account and nominate 3 persons of whom any 2 may operate the account.
Clause 101 provides that a body corporate must establish and maintain a long-term maintenance plan. The plan must cover a period of at least 10 years.
Clause 102 provides that a body corporate must establish and maintain a long-term maintenance fund. This fund may only be applied towards spending relating to budgeted maintenance items included in the long-term maintenance plan and only to the amount specified in the plan relating to each item. This amount may be exceeded if the body corporate by special resolution approves the new amount.
Clause 103 provides that a body corporate may establish an optional contingency fund. This fund is to pay for unbudgeted expenditure that may not be paid out of the long-term maintenance fund or operating account.
Clause 104 provides that a body corporate may establish and maintain a capital improvement fund for spending that adds to or upgrades the unit title development.
Clause 105 requires separate bank accounts to be kept for each of the funds.
Contributions
Clause 106 enables the body corporate to impose levies on unit owners to establish and maintain the funds. Subclause (2) sets out how the levies must be calculated. A future development unit that is in use as a place of residence or business or otherwise is to be treated as a principal unit and its owner as a member of the body corporate. This enables the body corporate to impose levies on future development unit owners. Liability to pay contributions levied by the body corporate begins on the date that the future development unit is first in use. Any levies raised must be sufficient to cover the levies raised by the head body corporate and any parent body corporate located directly between the subsidiary body corporate and its head body corporate.
Clause 107 requires the owner of a future development unit to notify the body corporate when all or any part of it is in use as a place of residence or business or otherwise. Subclauses (2) and (3) set out requirements in relation to the giving of the notice. After receiving the notice the body corporate must as soon as practicable send the owner a notice advising him or her of any levies imposed and how these levies were calculated.
Clause 108 expressly provides that the body corporate may enter into an agreement with the owner of a future development unit for the undertaking of any work or the expenditure of any money for the mutual benefit of the body corporate and that owner.
Clause 109 requires a body corporate to fix a date on or before which levies are due. Levies are recoverable as a debt due to the body corporate by the person who was the unit owner at the time the levy became payable or by the person who is the unit owner at the time the proceedings are instituted.
Clause 110 provides for the recovery of metered charges by the body corporate.
Clause 111 provides for the recovery of money expended for repairs and other work. This clause carries forward section 33 of the Unit Titles Act 1972.
Clause 112 provides for the recovery of money where a person is at fault. This clause carries forward section 34 of the Unit Titles Act 1972.
Clause 113 expressly provides that money owed to the body corporate by an owner accrues interest in relation to the unpaid amount. This clause carries forward section 34A of the Unit Titles Act 1972.
Spending, borrowing, and investing money
Clause 114 expressly provides that a body corporate may spend or borrow money and invest money. It may not, however, grant a mortgage, or a charge or any encumbrance over the common property.
Clause 115 provides that the body corporate may distribute surplus money or property amongst the unit owners in proportion to each unit owners ownership interest.
Audit and monitoring
Clause 116 requires the body corporate to keep full accounting records and to have its financial statements audited by an independent auditor. Copies of the financial statements for each financial year must be sent to all the unit owners within 6 months of the annual general meeting. A body corporate may opt out of the annual audit requirement by special resolution. However, this is only an option if the unit plan for the unit title development consists of 9 or fewer principal units.
Clause 117 gives special powers to the chief executive to monitor and report on the financial and maintenance planning regimes of the body corporate. To this end the body corporate must, on receiving written notice from the chief executive permit the chief executive access to the unit title development and all relevant information in the possession of the body corporate. Subclause (3) specifically states, however, that this does not authorise the chief executive or his or her agent from entering any principal unit without the consent of the owner.
Insurance
Clauses 118 to 121 retain the insurance provisions in sections 15, 38 and 39 of the Unit Titles Act 1972 with 2 minor changes. The Bill includes 2 exemptions to the general body corporate requirement to “insure and keep insured all buildings in the development”
. Clause 121(2)(a) provides that the responsibility for insuring all the improvements within the boundaries of the units may, by special resolution of the body corporate, be passed to individual unit owners in the case of principal and accessory units that contain stand-alone buildings. The body corporate remains responsible for insuring all improvements within the common property boundaries. Clause 121(2)(b) permits indemnity cover if full replacement cover is not available in the market.
Repair and maintenance
Clause 122 sets out the body corporate’s duties of repair and maintenance. To enable it to carry out its duties of repair and maintenance the body corporate may access at all reasonable hours any unit.
Review of service agreements
Clause 123 applies if a body corporate enters into a service contract before the date that the control period ends. A service contract is a contract engaging a person (other than as an employee) to provide services to the body corporate for a term of 1 year or more. In general terms, the control period is the period during which the original owner of the unit title development has control of 75% or more of the votes of the body corporate.
This clause requires the original owner to exercise reasonable skill, care, and diligence and act in the best interests of the body corporate to ensure that the service contract is fair and is in the best interests of the body corporate as it will be constituted after the control period ends.
Clause 124 applies to service contracts entered into during the control period. The Tenancy Tribunal (or court having jurisdiction under subpart 1 of Part 4) may—
Clauses 123 and 124 have no equivalent in the Unit Titles Act 1972.
Liability
Clauses 126 and 127 retains the liability provision in section 14 of the Unit Titles Act 1972 while modernising its language and structure.
Subpart 13—Disclosure of information
Disclosure of information by seller of unit
Clause 128 defines certain terms used in this subpart.
Clause 129 prohibits contracting out of the disclosure obligations under this subpart.
Clause 130 requires the seller of a unit in a unit title development to provide a disclosure statement (the pre-contract disclosure statement) to a prospective buyer before an agreement for sale and purchase is entered into. The content of the pre-contract disclosure statement will be prescribed in regulations.
Clause 131 requires the seller of a unit to provide a further disclosure statement (the pre-settlement disclosure statement) to the buyer before settlement. The content of the pre-settlement disclosure statement will be prescribed in regulations.
Clause 132 provides that a buyer may, before settlement, request an additional disclosure statement. The content of the additional disclosure statement will be prescribed in regulations.
Clause 133 deals with the situation where the seller does not meet disclosure obligations on time. If that situation occurs, the buyer is given the ability to postpone the settlement date.
Clause 134 requires the seller to rectify any inaccuracies in a disclosure statement that the seller becomes aware of before settlement date.
Clause 135 allows a buyer to cancel an agreement for sale and purchase if the seller does not provide pre-settlement disclosure or (any requested) additional disclosure on time under clauses 131 and 132. Therefore, the combined effect of clause 133 and this clause is that if a seller gives disclosure late, or not at all, the buyer has 2 possible remedies to choose from. These are—
Clause 136 requires that a disclosure statement must be dated and signed by the seller or a person authorised by the seller.
Clause 137 provides that the buyer is entitled to rely on the information contained in a disclosure statement as conclusive evidence of the accuracy of the matters described in that information.
Disclosure by original owner of unit title development to body corporate
Clauses 138 to 141 provide for the original owner of a unit title development (as defined in clause 128) to disclose information to the body corporate once the original owner no longer has control over the votes of the body corporate.
Clause 138 provides that the original owner must notify the body corporate when the control period ends. The date that the control period ends is defined in clause 128 and, in general terms, is the date that the original owner ceases to exercise 75% or more of the votes of the body corporate.
Clause 139 requires the body corporate to hold a general meeting within 3 months from the date of the notice given under clause 138.
Clause 140 requires the original owner at the general meeting to—
Clause 141 requires the original owner to rectify any inaccuracies if the original owner becomes aware that information in the turn-over disclosure statement was inaccurate as at the date that the control period ended.
The disclosure regimes in this subpart have no equivalent in the Unit Titles Act 1972.