Nicola Kelland - Unit Titles

A common perception that many people have when looking at a unit title property, such as an apartment, is that they are not purchasing any land. This is not the case. When purchasing a unit title within a body corporate, you’re also purchasing an undivided share of the land that the property is built on, based on your unit entitlement percentage. This unit entitlement percentage is also how costs & benefits are divided between unit owners, and will vary based on the different unit sizes, level in the building and other factors.

As a form of ownership, unit titles are like other properties where they can be bought and sold, leased or mortgaged etc… but unlike other types of title, they are made up of three different components: The primary unit, any accessory units (usually a car park or storage locker), and a share of the common property. In most cases, accessory units can be bought and sold separate from primary units if they are being sold to someone who also owns a primary unit. An accessory unit must always be that, an accessory to the primary.

The process of buying or selling a unit title property is also a little different compared with Freehold and Cross Lease titled properties, because they’re governed by the Unit Titles Act 2010 which came into effect mid 2012. Under the Unit Titles Act, there are new rules about disclosure prior to entering a contract, and prior to settlement. This is where the Pre-Contract Disclosure (PCD) and Pre-Settlement Disclosure (PSD) statements come into play. These are two important documents you need to understand when buying or selling a unit title property.

It is now a legal requirement that a purchaser be provided with a PCD prior to making an offer. This must be signed by the vendor, and will contain important information relating to the body corporate levy, financial info, whether or not the unit or common property has ever been the subject of a weather tightness claim under the WHRS Act, and other important information.

The PSD statement contains basically the same info as the PCD, and its main use to a purchaser is to identify if there have been any major changes within the body corporate since the contract was entered. These changes could possibly happen if an AGM (Annual General Meeting) has taken place between receiving the PCDS and the settlement date. Possible changes could include changes to the budget, committee members and discussion on any new issues that may have arisen within the body corporate.

As purchaser, when looking at an apartment, it’s important to ensure you’re provided with a PCD, get a copy of the agenda for the next AGM meeting if it’s scheduled before your settlement date, and when choosing a solicitor, ensure he or she has experience with the Unit Titles Act 2010.

As a vendor, it is your responsibility to provide a signed copy of the PCD. You can put these together yourself with the information you’ve been provided by your body corporate administrator, but we would always recommend you have them put it together for you, as any mistakes in this document could potentially become a problem that you will be responsible for.? ?We thought it would be valuable to provide you with this information, as over the past 12 months we’ve seen the apartment market in Auckland continue to grow from strength to strength, and with the new Unitary Plan, plans to build many more apartment complexes are well and truly underway. It’s a very exciting time for Auckland, and we’re happy to be a part of it on the front line.