Your Guide To The Unit Titles Act
Whether you’re a property owner, investor or someone interested in understanding unit/apartment living, the unit titles act is a crucial piece of legislation to be aware of.
On 9 May 2023 REINZ published several changes, and there are more to come next year.
Together with Russell and Claire from Queenstown Law – we’ve put together some frequently asked questions when it comes to the Unit Titles Act.
Q: What is a unit title?
A: A unit title property is when an owner owns a segment of the building, for example an apartment or unit, rather than the entire complex. Unit title owners often share common property such as stairs/foyer/driveway with other owners in the complex.
Q: What are my obligations as a Vendor when selling my unit title property?
A: As governed by the Unit Titles Act – you are required to provide the Purchaser with both a Pre-Contract Disclosure Statement and a Pre-Settlement Disclosure Statement.
If you’re not sure what these statements are – you can read more about them here https://www.rea.govt.nz/real-estate-professionals/listing-a-property/unit-title-guidance/
Q: Who should prepare the Pre-Contract Disclosure Statement and the Pre-Settlement Disclosure statement?
A: The Body Corporate must provide the Vendor with a Pre-Contract Disclosure Statement (before any agreement is signed) and a Pre-Settlement Disclosure Statement (by the required timeframe)
Q: What information must be included in the Pre-Contract Disclosure Statement and the Pre-Settlement Disclosure Statement?
A: With the new changes that have come into effect, there is additional information that must be included;
- Whether the body corporate is involved in any legal proceedings
- Any weathertightness issues/ claims
- Any earthquake prone issues
- The Body Corporates financial statements and audit reports for the past three years
- Agendas and minutes of general meetings for the past three years
- Body Corporate manager details
- Remediation reports commissioned by the Body Corporate during the past three years.
- Body Corporate levies and whether there have been any changes in the operational rules since the pre contract disclosure statement was provided.
- Copy of any long-term maintenance plan, and the next review date
- Any work proposed for the next three years under the long-term maintenance plan.
- Insurance details.
Q: What are the costs involved in preparing a Pre-Contract Disclosure Statement and a Pre-Settlement Disclosure statement?
A: This is likely to vary depending on the Body Corporate Manager and the size of the Body Corporate. Due to the changes that have come into effect, more information now needs to be included in these documents, costs are likely to increase. The good part about having more information is that the Purchaser will be fully informed and enabled to make a decision.
Q: When should the Vendor provide a Pre-Settlement Disclosure Statement to the Purchaser?
A: At least 5 working days before the Settlement date. If the Vendor provides a complete and accurate Pre-Settlement Disclosure Statement at any stage, but it comes within five working days of settlement, the buyer can delay settlement by another five working days from the date of the disclosure, presumably to have enough time to assess the information.
Q: I live in a duplex, and we have never had a formal Body Corporate. Do I still need to provide a Pre contract disclosure statement and a pre settlement disclosure statement if I sell?
A: Yes. If a Vendor fails to provide complete and accurate pre contact or pre settlement disclosure statements, the Purchaser can cancel the contract.
Q: What happens if the information included in the statements is incomplete or wrong?
A: The Purchaser has express rights to delay or cancel the contract.
Q: I live in a duplex and we have never had a formal Body Corporate. I have arranged insurance for my unit with X. The other duplex owner has arranged for their own insurance with Y. Is that okay?
A: Sometimes duplex owners insure their respective units with different insurers rather than through a Body Corporate policy. There can be problems, because one policy may not provide the cover required under the Unit Titles Act (especially if one owner has gone for the cheapest option) This might also be a breach of the mortgage.
It is certainly more risky if different units have insurance cover through different insurance companies and unless the units are stand alone, insurance should be dealt with by the Body Corporate. If the units are stand-alone units the Body Corporate can require each owner to arrange their own cover.
Selling a unit title can be complex, and its important to have all the right pieces of the puzzle to have a successful sale. Harcourts is extremely experienced in dealing with unit titles for sale as there are many apartments and units around our regions.
If you’re looking to sell or buy a unit title property, or would like some guidance around your obligations in line with the unit titles act get in touch with us or Queenstown Law.