In the late 1960s and early 1970s, there was a dramatic increase in the urbanisation of New Zealand. To satisfy the new demands raised by the proliferation of apartment and office blocks, a new legal structure called "unit title" was created (by the UNIT TITLES ACT 1972) to provide for multiple ownership of common spaces and facilities, such as driveways and lifts.
A unit title development (such as an apartment block) consists of:
As a form of ownership, unit title is similar to other property in that it can be bought and sold, or leased or mortgaged. But unlike other forms of title, it is made up of three components:
Other names for unit title are "stratum estate" or "strata title".
An accessory unit is an inseparable part of the principal unit and therefore ownership of the accessory unit accompanies ownership of the principal unit. The accessory unit can be let under a monthly or weekly tenancy, but it cannot have a totally separate owner.
The unit owners own the common property as "tenants in common". This means that, when a unit owner dies, the share of that owner passes to his or her estate and therefore according to his or her will. This is in contrast with ownership as "joint tenants", whereby an owner’s share passes to the other owners if he or she dies.
Each owner’s share in the common property is proportional to their "unit entitlement".
Each unit has assigned to it a "unit entitlement". This is a figure fixed by the Valuer-General or a registered valuer calculated on the basis of the relative value of the unit in relation to the other units on the plan.
The amount of the entitlement is very important as it determines:
The body corporate is a unique feature of the unit title scheme, and consists of all the owners of the units acting as a group.
The body corporate has two main duties:
The body corporate also has duties that apply under its rules (see below for the rules).
In larger developments there is usually a Manager or Management Committee employed to carry out the body corporate’s duties.
The body corporate establishes a fund from which payments are made for insurance, rates, maintenance and other expenses. The body corporate levies the owners in proportion to their unit entitlement.
The fund usually runs to a set budget. However, if work or levies are required over a certain sum a Special General Meeting of the body corporate is called to discuss this.
A body corporate has rules, which govern the unit owners’ relationships with each other and with third parties. The UNIT TITLES ACT 1972 sets out rules in its Second and Third Schedules; these will apply to any unit title development unless they are varied by the body corporate.
The rules in these Schedules include the powers and duties of the body corporate, and also the responsibilities of unit owners.
The Second Schedule of the Act sets out a number of rules that automatically apply unless they are varied by a unanimous resolution of the body corporate.
These include the following duties of unit owners:
The Third Schedule sets out rules relating to unit owners that can be amended by a majority resolution of the body corporate:
To create a unit title development you will need to subdivide the land into units by depositing a plan with the local office of the Land Titles Service, which you can contact through the regional offices of Land Information New Zealand.
The plan is called a "unit plan". Your unit plan will need to show the principal units, the accessory units, and the common property.
Once the unit entitlements are set and you have obtained the necessary consents of any parties who have an interest in your land (anybody who has lent you money or who has a charge over your title), you will be able to deposit the plan.
You will need to address the issue of what additional rules will be needed over and above the standard rules.
If you are intending to buy an apartment or other unit title property, you should consider the following issues: