Review of the Unit Titles Act 1972 - Discussion Document, May 2006
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5.2 Making Title and Survey Matters Clear
The current Act is unclear on many important points to do with definitions and responsibilities. This has led to inconsistencies and disputes.
The proposals in this section cover:
- (a) the definition of a principal unit
- (b) common property and how it is defined
- (c) easier rules for staged developments
- (d) easier rules for creating easements and covenants
- (e) better management of leasehold land.
(a) Definition of principal unit
Issues
Under the Act a principal unit is a unit designed for living or working in, with or without an accessory unit.
Many people have a view that the Act doesn't allow a unit title to be issued if the unit title doesn't have a building in it. They believe this because other provisions in the Act and the Resource Management Act 1991 have been interpreted in this way. However, the Unit Titles Act actually allows the definition of a principal unit to be interpreted in four different ways. These are that a unit:
- is defined and bounded by the physical dimensions of a building (ie, there is no open space, because the outer surfaces of the building and the boundaries of the unit are the same)
- contains a building but is larger than the building, so that there is space between the outer surfaces of the building and the boundaries of the unit
- is totally open space, but there is a plan for a building
- is totally open space, and there is no plan for a building of any sort.
Although some units are currently made up entirely of open space (as in the fourth definition), we think this interpretation should be removed.
| A principal unit must either contain a building or define plans for a building, but the dimensions of the unit may or may not be the same as the physical dimensions of the building. |
| An accessory unit supports an associated principal unit and can't have an independent certificate of title. It can't be transferred or sold outside the unit development but it can be transferred or sold to owners of other principal units in the same unit title development. |
| An accessory unit can be entirely open space. A statement of future development (see P12-P13) will protect unit owners and potential buyers. |
Effect of proposals
Developers, surveyors, lawyers and councils will be clear about the definition of a principal unit. They will know that it must include a building or plans for a building.
Unit owners won't have to ask the body corporate if they want to make alterations and additions to buildings inside their unit boundary. However, they will still have to obey body corporate rules and any other relevant building and construction laws and regulations.
Unit owners and buyers will have more information about developments planned for the future. This will protect them and the value of their units.
Everyone will be following the same rules.
| Do you agree with the proposals for principal and accessory units? If you do, is there anything else we should consider? If you disagree, please explain why. |
| Should completely open space principal units be allowed? If you think they should, please explain why. |
| What are the advantages and disadvantages of the proposals for you? |
(b) Concept of common property
Issues
People are often unsure about the exact boundary between units and common property.
This can lead to complex and expensive arguments that are usually about who will arrange and pay for repairs or maintenance.
It is possible to put a lot of detailed survey information and notations on unit plans but we decided not to propose this. It could make unit plans more expensive without providing a complete solution in all cases.
| The body corporate will be responsible for all repairs, maintenance and management of common property. This will include deciding what repairs and maintenance are needed, getting them done and paying for them. |
The definition of common property will be: - everything that is not contained in a unit as defined by survey (which determines ownership)
- infrastructure for services and utilities1 that service more than one unit
- all building elements2 that affect the structural integrity of structures within more than one unit
- building elements within a unit that affect the structural integrity of structures within another unit.
|
| This definition will mean that the body corporate will have responsibility for repairs and maintenance of some infrastructure and building elements that will be located within a unit and are owned by a unit owner. |
| The default survey definition of a unit boundary will be the centre point of the walls, floors and ceilings, as covered by the Surveyor-General's Rules, unless clearly indicated otherwise on the unit survey plan. |
Effect of proposals
Boundary definitions and responsibility for repairs, maintenance and management will be clear. A more expensive prescriptive approach to boundary definition, which may be of limited use, will not be needed.
There won't be so many boundary disputes.
The new definition of common property will recognise and reinforce that unit dwellers are part of a community and should share the cost of anything that benefits the whole community.
Unit owners will have sole responsibility for their standalone buildings, but must keep any body corporate rules about, for example, design, colour or standards of maintenance.
Do you agree with the proposals for the extended definition of common property? If you do, is there anything else we
should consider? If you disagree, please explain why. |
| Will the proposed definition of common property remove the existing confusion about who is responsible for maintenance? If you don’t think it will, please explain why. |
| What are the advantages and disadvantages of the proposals for you? |
| Will the proposals have any financial implications for you? If so, please explain, giving as much information as you can. |
(c) Staged development provisions and changes to plans
Issues
The Unit Titles Amendment Act 1979 allows for the subdivision of land into units in stages over time.
Owners of land must deposit stage unit plans with LINZ that show which units and parts of the common property have been completed and which are future development units. A complete plan must be deposited when the development is finished.
Once a plan is deposited it can't be changed in any way, so any boundary changes need a new plan. At present, boundary changes need the consent of every unit owner, owners of future development units, mortgagees and other people having a registered interest in a unit including caveators. This requirement for 100 percent agreement is inflexible, is often difficult to obtain, and the process can be difficult to manage.
Where there isn't 100 percent agreement on an issue, but there is a majority opinion, the High Court can rule that there is no need for unanimity. However, this process takes time and is expensive.
| Plans must be deposited with LINZ as each stage of the development is completed. |
| Minor boundary changes between adjoining units can be made if they are agreed to by the unit owners. They will not need consent from other unit owners in the development unless the changes affect their enjoyment of their unit or any part of the common property. |
| Non-minor unit and common property boundary changes will be allowed if there is a '75/75 percent vote'. This is defined as agreement by 75 percent of the principal unit owners who vote AND, if requested by any unit owner, 75 percent of the unit entitlement represented by those who vote. |
| Developers must provide a 'statement of future development'. This will explain the size of the building envelope, how many units are planned, what the units will be used for, and how owners will be affected by the rest of the development. Potential buyers will get the statement of future development under the disclosure proposals (see P69). |
| Developers will be allowed to build the units they have included in the statement of future development. If they want to make any changes, they will need a 75/75 percent vote. |
| If the developer controls 75 percent or more of the body corporate votes, any change to the deposited plan will require a 75/75 percent vote by the other owners. |
Effect of proposals
It will be easier to make boundary changes.
The statement of future development will give unit owners and buyers important information about the final form of the development. It will also let the developer go ahead with each stage without needing unanimous body corporate agreement each time.
The developer may respond to market conditions and deviate from the statement of future development if 75 percent of the owners agree.
If there is a dispute, unit owners and developers will be able to use the proposed dispute resolution process.
Do you agree with the proposals for staged developments?
If you do, is there anything else we should consider?
If you disagree, please explain why. |
| What are the advantages and disadvantages of the proposals for you? |
Will the proposals have any fi nancial implications for you?
If so, please explain, giving as much information as you can. |
(d) Easements, covenants and access lots
Issues
The Act does not completely cover matters relating to easements and covenants and it is too prohibitive.
For example, the Act says that a unit development can only occur when all the land is held, or could be held, in a single title. If the land is not on a public road, access can't be obtained through shared ownership of an access lot with other owners whose land is not part of the proposed unit development.
| All existing easements and all covenants3 over or in favour of the underlying reversionary interest will survive the deposit of a unit plan. |
| Once a unit plan is deposited, all existing easements and covenants over or in favour of the underlying reversionary interest can be surrendered, and varied. In addition easements in gross over the underlying reversionary interest can be assigned. |
| Once a unit plan is deposited, new easements and covenants can be created over or in favour of the common property or units, but not the underlying reversionary interest. |
On cancellation of the unit plan, easements and covenants over or in favour of: - the underlying reversionary interest may either survive, or be cancelled
- common property may either survive, or be cancelled
- units must be cancelled
|
| Easements can be created in favour of common property or units, over land that is outside the unit development. |
| Shared ownership of access lots with other owners whose land is not part of the unit development will be allowed. |
| Easements and covenants over the common property will require a 75/75 percent vote to enable their creation, surrender, variation or assignment, and easements and covenants over the underlying reversionary interest will require a 75/75 percent vote to be surrendered or varied. |
| Easements and covenants that affect units will require the consent of the unit owner as well as a 75/75 percent vote to be created, surrendered, varied or assigned. |
Effect of proposals
It will be easier to create and deal with easements, covenants and shared ownership of access lots.
Do you agree with the proposals for easements, covenants and access lots? If you do, is there anything else we should
consider? If you disagree, please explain why. |
| What are the advantages and disadvantages of the proposals for you? |
| Will the proposals have any fi nancial implications for you? If so, please explain, giving as much information as you can. |
A '75/75 percent vote' is defined as agreement by 75 percent of the principal unit owners who vote AND, if requested by any unit owner, 75 percent of the unit entitlement represented by those who vote.
(e) Leasehold land
Issues
We have not found any major problems with unit title developments on leasehold land. However, they can be difficult and time-consuming to deal with and can have many parties involved. They would be easier to manage if the body corporate, the ground lessor and unit owners were all clear about their roles, powers and responsibilities.
Unit owners also need to know that the body corporate will make important decisions about rights of renewal or purchase when the ground lease ends.
| Unit title developments can be created on leasehold land. |
| Body corporate rules for leasehold developments must be detailed and specific with regard to the relative rights and responsibilities of the body corporate, lessors and unit owners. |
Disclosure will be improved so that prospective owners understand leasehold tenure and the likely costs of the
ground rent (see P69). |
Effect of proposal
Everyone who is part of a unit title development on leasehold land will understand their own responsibilities. This will make everything work more smoothly.
| Do you agree with the proposals for leasehold land? If you do, is there anything else we should consider? If you disagree, please explain why. |
| What are the advantages and disadvantages of the proposals for you |
(f) Cross-lease properties and flat-owning companies
Issues
We haven't found any major problems with cross-lease properties and flat-owning companies.
Flat-owning companies were originally used to develop medium - and high-density housing before the Act was passed. Cross-lease properties were developed in response to restrictive subdivision rules by local authorities. However, over the years local authorities have updated rules for subdivision, to allow for medium - and high - density development. Although existing cross-lease properties and flat-owning companies are still popular, it is now rare for new ones to be created.
Under the Act, flat-owning companies and cross-lease schemes can be changed to unit title ownership. It doesn't seem necessary to do anything else about this type of property ownership.
| No changes will be made to cross-lease properties and flat-owning companies. |
Effect of proposal
Market demand will continue to drive the supply and popularity of cross-lease properties and flat-owning companies.
| Do you agree with the proposal for cross-lease properties and flat-owning companies? If you disagree, please explain why.? |
1 Examples of infrastructure for services and utilities include pipes, wires and conduits for water, wastewater, stormwater, electricity, telecommunications and air-conditioning.
2 Building elements are things such as roof, exterior cladding systems and foundations.
3 Covenants include land covenants under the Property Law Act 1952 and other statutory covenants for example the Historic Places Act 1993, the Queen Elizabeth the Second National Trust Act 1977 and the Reserves Act 1977.
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