If you own an apartment or a unit in a small body corporate and you wish to sell, you can only do so if your body corporate complies with the Unit Titles Act 2010 (“UTA”) and you provide disclosure statements to the purchaser.
Compliance with the UTA
To comply with the UTA the first annual general meeting (“AGM”) of the body corporate (which should have been held on or before 20 December 2011) should have dealt with the following matters:
- The nomination and election of a chairperson of the body corporate (who must be a unit owner or a director of a unit owner) whose duties include signing certificates relating to disclosure statements.
- The nomination and election of committee members, the chairperson of the committee, and the delegation of responsibilities of the chairperson of the body corporate to the body corporate committee. This requirement may not apply to your body corporate if there are 9 or less principal units in the development.
- Whether or not to adopt the new default operational rules contained in the Unit Titles Regulations 2011 or to re-register your body corporate’s specific rules with LINZ before 1 October 2012.
- A body corporate may amend, revoke or add to its body corporate rules provided that the rules comply with the UTA and relate only to such matters as control, management, administration, use and enjoyment of the principal unit, future development unit, accessory units and common property. It is important that any existing rules which protect particular use rights, for example, use of common property, which the body corporate wishes to retain, comply with the UTA and are included in the operational rules which is re-registered before 1 October 2012.
- Deciding on the management of the body corporate operating account and how the financial statements and new auditing requirements will be met.
- Whether the maintenance regime set out in the UTA will apply to your body corporate and whether a long term maintenance fund is to be established.
Another important issue which the body corporate will need to decide upon is in respect of insurance of the development. Generally, the body corporate must insure all buildings and other improvements on the land. If your development consists of stand-alone units, the body corporate may by special resolution require each unit owner to insure their own unit and improvements within the unit. The body corporate will remain responsible for insuring any improvements on the common property.
When selling an apartment or a unit in a unit title development, a vendor is now required to provide the following disclosure statements to a purchaser:
- Pre-contract disclosure statement: to be provided to a purchaser before the agreement for sale and purchase is signed;
- Pre-settlement disclosure statement: together with the insurance certificates to be provided to a purchaser no later than the 5th working day before the settlement date;
- Additional disclosure statement: if requested for by the purchaser, at its own cost, by the earlier of the 5th working day after the date of the agreement or the 10th working day before settlement.
Failure to provide these disclosure statements or the insurance certificates to a purchaser could lead to settlement being postponed or the agreement being cancelled so it is important that these disclosure statements are correctly completed, certified by the body corporate, and provided to the purchaser within the requisite timeframes.
For more information about compliance with the UTA and disclosure statements please contact one of our property lawyers to discuss.