Thomas Gibbons: Body corp law must be rewritten

NZ’s body corporate problems need to be identified and addressed properly.
People holding unit titles make up a decent-sized city but body corporates are problematic. Photo / Richard Robinson
People holding unit titles make up a decent-sized city but body corporates are problematic. Photo / Richard Robinson

Fran O'Sullivan is right - the new website is a good start - but it isn't nearly enough.

I deal with the Unit Titles Act nearly every day. The phrase "dog's breakfast" often comes to mind. There are a lot of good ideas, not quite executed properly, and quite a few bad ideas as well.

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Problems with the Act were identified even before it came into force, and most of these haven't been addressed.

Debate seems to be focused on the role of property managers. They are only part of the issue.

As with many things in life, there are good managers and bad managers, and generally, you get what you pay for.

There are many other issues - committee member liability, who pays for maintenance, what happens if no one wants to be chairperson - that also need to be addressed.

A generation or so ago, New Zealand was called a quarter-acre paradise. This has changed in most urban areas, and there are now more than 120,000 unit titles.

We could guess they house at least as many people as live in Tauranga. That is, unit titles make up a decent-sized city.

The original legislation was developed in the 1970s as an "own your own flat"-type regime.

New Zealanders have tended to treat their unit as drawing from the quarter-acre paradise model - "my house my castle".

But there are important collective elements with a unit title, and it's really more "my house, part of somebody else's castle".

Owning a unit also involves being a member of a club - the body corporate - and the club can make decisions you don't like.

O'Sullivan has rightly called attention to how these decisions are made, making the point that overseas jurisdictions regulate things like the number of proxies an individual can use.

In fact, many things about unit titles are closely regulated in Australian jurisdictions, including managers' insurance commissions, the reassessment of lot entitlements, and others. Some of these points are described as election issues in Australia.

It's hard to see that happening in New Zealand, but also not. Body corporates are themselves tightly regulated by ultra vires principles that have been described in a number of cases.

That is, the body corporate can do a very narrow range of things, and anything outside that is prohibited. Of course, lawyers nearly always have workarounds.

But the broader point is that bodies corporate suffer from a high degree of regulation in some areas (such as not being able to own or lease property, even when that would be useful) but not in others (such as there being few restrictions on proxies or body corporate managers).

This kind of inconsistency needs to be addressed. What is needed is a back-to-basics and properly funded analysis of what is working, and not working, with bodies corporate and with unit ownership, and then a political commitment to see reform.

There are plenty of people with an interest in the topic - not just those who live or invest in New Zealand's 120,000 or so units, but all those who know them, advise them, and hear their stories.

The dog's breakfast situation is good for lawyers, but I don't know any lawyer who thinks that's actually a good thing. All of them would like a better, clearer, more practical Act.

No legislation can be perfect. Human nature means there will always be issues with people living closely together, and there are some people who just aren't suited to being part of a club.

But that doesn't mean we can't do better, and many of the problems are simple to resolve.

It has been said that meaningful reform won't happen until a Minister's grandmother has a body corporate issue.

That can't be far away. In the meantime, it's up to the city-sized body corporate population to make their voice heard, and to push for something better than a website portal.

- NZ Herald

Thomas Gibbons is a director of McCaw Lewis, Lawyers, and the author of Unit Titles Law and Practice (2nd ed, 2015)

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