Body Corporate Matters

We can assist you with governance issues which may arise in relation to your body corporate.  These issues will include:

1. Election of a chairperson
2. The role of the chairperson and delegation of duties.
3. The body corporate committee.
4. Meeting and voting procedures for AGMs and EGMs.
5. Ordinary and special resolutions.
6. Tailoring your body corporate rules for your development. [link to our page on body corporate rules]
7. Long term maintenance plans.
8. Contracting out where there are standalone buildings in the development.
9. Body corporate powers and duties.
10. Unit owner rights and responsibilities.

Governance issues are very sensitive where the development is a "leaky building".  This is particularly so where there is a section 74 scheme [link to our page on schemes] in place.  We are currently working with a number of committees in relation to their schemes as part of their leaky building claims.

Care needs to be taken when looking at body corporate rules.

The first step is working out what the rules are

Just because a notice of change of rules for a body corporate has been registered against the title to a unit doesn't mean that those rules are still current.  Don't be fooled as old rules may now be redundant. 

Generally if a change of rules was registered under the old Unit Titles Act 1972 and replacement rules under the new Unit Titles Act 2010 have not been passed and registered, those old rules will now be replaced by the default rules set out in the Regulations.  There will not be anything noted on the title to draw this to your attention and it would be quite easy to incorrectly assume that the old rules are still in effect.

Working out what can be changed from the new Act

The new Act draws a distinction between the parts of the old rules for voting and meeting procedures which are now in the Act and the operational rules which are in the Regulations.  Only the operational rules can be changed.

When it comes to changing the default operational rules, we need to ensure that any changes are permitted by the Act.   A purported change to the default rules must not exceed the discretion given in the Act and if this discretion is exceeded then the new rule will not be valid.  The rules will also be invalid if they are contrary to the Act.

The default operational rules in the Regulations are very basic.  There are only two rules compared to the extensive rules that should be used for complex developments.  Rules for commercial developments will also be quite different from rules for mixed use or residential developments.  Examples of the types of changes you should consider would include control and administration of common facilities such as visitor parking, gym facilities or a swimming pool.  To ensure that your development is going to work for everyone, you should check that the operational rules are drafted specifically for your development.

Given that there are now more restrictions on what can be contained in body corporate rules, other options such as a land covenant should also be considered.  We have been using land covenants now for many years - particularly for redevelopment rights.

We can assist with the process for adoption of the new rules by the body corporate and registration of the new rules at LINZ.  Care needs to be taken with the notice of change of rules to ensure that it is signed correctly.

If you would like us to review your rules please contact Kay Keam or one of our property team.

We can assist you with debt collection issues arising in relation to your body corporate in an effective and cost-efficient manner. Such issues may include:

1. Advising you on the cost-effectiveness of pursuing any particular debt and "cost versus recovery".
2. Advising you on how to commence the debt collection process including: issuing the initial letter of demand, advising you on the "statutory demand" process and whether it is available for your debt and issuing a statutory demand.
3. Negotiating with debtors and payment plans.
4. Advising you on each stage the Court process for debt recovery including: commencing Court proceedings by way of a Notice of Claim or Statement of Claim; assisting you in finding an address for a debtor; obtaining orders allowing substituted service of documents where an address for a debtor cannot be found and obtaining judgement.
5. Advising you on the cost-effectiveness and consequences of Court execution processes including: bankruptcy, liquidation and attachment orders.

Collecting a debt can be a sensitive and often tiring process. Our team can make this process as straightforward as possible, allowing you to collect debts in a simple and cost-effective way.

It is recommended that current and potential members of a Body Corporate in a unit title development understand the nature and effect of a "section 74 Scheme".

What is a section 74 scheme?

Where a building in unit title development is damaged, perhaps by reason of being a leaky building, the Body Corporate usually takes charge of the repairs.

More often than not, the repairs involve work to both private and common property. There is also a wish by owners that if repairs are required, then they should be done to the same standard and at the same time. 

In general, a Body Corporate is not entitled to levy for or do work to a unit's private property. So, and unless all unit owners are in agreement about the way forward, the Body Corporate is obliged to apply to the High Court for an order under section 74 of the Unit Titles Act to empower the Body Corporate to effect the repairs, allocate the costs of the repairs equitably amongst unit owners and levy owners to pay for them. The Court's order is commonly referred to as a "section 74 Scheme".

Unit owners are invariably consulted regarding the proposed scheme before it is put before the Court and, of course, if they have unresolved concerns they have the right to be heard by the Court when the application is made. The fact the Court is involved helps to ensure that the scheme is fair and, ultimately, binding on all owners. 

What might this mean for you?

Once the High Court makes an order, the Body Corporate (or some of its members) are empowered to commission the repairs and recover the cost of them from unit owners even if some owners are less than cooperative. Problems can and will be encountered, but a well drafted scheme ought to anticipate this and offer practical and fair solutions to those problems.

How we can help

Designing and implementing an inclusive scheme will ensure repairs proceed as efficiently as possible and ought to help members within the unit title community live together in harmony once the work is finished. Our team can assist Body Corporates to develop just such a scheme. 

We have a very experienced team in this area.  Please refer to our leaky building section for a more detailed breakdown of the services we provide.