LEGAL
Progress on Unit Titles
(STRENGTHENING BODY CORPORATE GOVERNMENT AND OTHER MATTERS) BILL Joyce Chiu, In-house Counsel & Advisory Services, REINZ
With high density property arrangements becoming increasingly common in New Zealand, REINZ has taken an active role in the review of the Unit Titles Act 2020, supporting the proposal to improve the information disclosure regime, strengthen governance arrangements and increase the professionalism and standards of body corporate managers.
Many of our members will be aware that REINZ was part of the Unit Titles Working Group which drafted the Unit Titles (Strengthening Body Corporate Governance and Other Matters) Amendment Bill (the Bill). REINZ also filed submissions (mainly) in support of the Bill.
settlement should be appropriately balanced between the buyer’s and seller’s needs.
Now, 18 months since the Bill introduction, the Finance and Expenditure Select Committee has published its findings and recommendations.
Based on the advice the Select Committee received, it recommended additional disclosures vendors must include in the pre-contract disclosure, including details of weather tightness issues, other known defects that may require remediation, the body corporate’s long-term maintenance plan and copies of the body corporate’s financial statements and audit reports.
Recommendation from the Finance and Expenditure Select Committee In the Select Committee’s report, members supported the continuing obligation of the vendor to produce a pre-settlement disclosure but recommended the removal of the buyer’s ability to request additional disclosure — or the requirement for a body corporate to endorse the pre-contract disclosure statement.
It was also noted that this entire regime is dependent on the body corporate keeping records. However, there is currently no obligation in the Bill to hold bodies corporate accountable for failing to keep proper records.
Strengthening the disclosure regime is welcomed by our members as compelling a vendor to disclose all relevant information pre-purchase would better protect agents and purchasers.
It is clear from the Committee’s recommendations that the intent of the review is to lessen the administrative burden on bodies corporate and vendors. In line with this objective, the recommendations included the right for the vendor to delegate disclosures and remove the requirement to discuss with the buyer any issues arising from the disclosure.
Body Corporate Management standards heightened
Additionally, it was found that a buyer’s right to cancel the contract shouldn’t be so easily exercised due to its tendency to affect the parties, and the right to delay or cancel
The Bill now awaits its second reading in parliament as we wait to see whether the Select Committee’s recommendations are implemented.
Although REINZ would have ideally liked to see this go further and require regulation of body corporate managers, it is very pleasing to see the Bill will require Body Corporates to implement a code of conduct, as well as robust systems in conducting their reporting and administrative functions.
AUTUMN 2022
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