Unit titles cover most apartments and a growing share of townhouse and commercial developments, particularly in Auckland and Wellington. Buying one is materially different from buying a freehold property, and the differences are financial as well as legal.
What you actually own
A unit title divides a development into principal units (your apartment), accessory units (car park, storage locker) and common property (lobbies, lifts, roof, structure, grounds), which is owned collectively by all unit owners.
Every owner is automatically a member of the body corporate, which is a legal entity responsible for managing and maintaining the common property. Membership is not optional and cannot be resigned.
Your ownership interest is expressed as a utility interest and an ownership interest, set by valuation. These determine your share of levies and your voting weight, and they are not necessarily proportional to floor area.
Levies and the long-term maintenance plan
The body corporate sets levies to fund operating costs — insurance, cleaning, lift servicing, management fees, utilities for common areas — and to build a fund for future capital works.
Bodies corporate must have a long-term maintenance plan covering at least ten years, identifying major maintenance and estimating cost. Whether a long-term maintenance fund is established, and how well funded it is, is the single most consequential financial fact about a unit title property.
An underfunded plan does not remove the cost; it defers it into a special levy. Special levies for re-cladding, roof replacement, lift replacement or seismic strengthening routinely run to tens of thousands of dollars per unit, are payable whether or not you can afford them, and become a charge against your unit if unpaid.
Pre-purchase disclosure
The Unit Titles Act requires disclosure to buyers in stages, and these documents are where the problems are visible:
- Pre-contract disclosure — basic information including levies and the body corporate’s contact details.
- Pre-settlement disclosure — the current financial position, levies owing on the unit, and whether there are known proceedings.
- Additional disclosure — available on request at the buyer’s cost, and this is the one that matters. It reaches minutes, the long-term maintenance plan, the financial statements and known defects.
Requesting additional disclosure costs a few hundred dollars and is the best-value spend in the entire transaction. Buyers routinely skip it and then discover a re-cladding project that had been discussed at committee for two years.
Read the last three years of committee minutes specifically. Building problems appear there long before they appear in a levy.
Operational rules and what they restrict
Bodies corporate can make operational rules governing the use of units and common property — noise, pets, short-term letting, alterations, parking, use of common areas.
Short-term letting restrictions matter commercially. A rule prohibiting or limiting it changes the investment case entirely, and rules can be changed by resolution after you buy.
Alterations to your own unit frequently require body corporate consent where they affect common property or the building’s structure or services, which includes a surprising range of ordinary renovation work.
Governance and how decisions get made
Decisions are made at general meetings, with different thresholds depending on the matter — ordinary resolutions for routine business, special resolutions for significant decisions. A body corporate committee typically handles day-to-day matters, and many engage a professional body corporate manager.
The quality of governance varies enormously and directly affects value. Well-run bodies corporate have current maintenance plans, adequate reserves, insurance reviewed periodically, and minutes that show issues being addressed. Poorly run ones have deferred maintenance, disputes and a levy that has not moved in a decade because raising it was unpopular.
Insurance
The body corporate must insure the building for full replacement value. Owners generally need their own contents and, importantly, cover for the excess and for any loss of rent — the body corporate policy will not cover those.
Check when the building was last valued for insurance. Underinsurance across a body corporate is a systemic risk that only becomes apparent after an event.
Practical guidance for buyers
- Always request additional disclosure, and read the minutes and the long-term maintenance plan.
- Ask specifically about the balance of the long-term maintenance fund and whether any special levy is contemplated.
- Check the seismic rating for the building, and any council notice.
- Confirm the operational rules on letting, pets and alterations before you commit.
- Have a lawyer with unit title experience review the disclosure. It is a specialised area and general conveyancing does not always catch the issues.
Tenancy Services publishes guidance on unit titles and body corporate obligations free at tenancy.govt.nz, and the Unit Titles Act itself is available at legislation.govt.nz.
General information only, not legal advice.
