On June 20, new unit title legislation will bring sweeping changes to the real estate industry in Queenstown and New Zealand.
All owners of unit-title properties will be affected.
The existing Unit Titles Act 1972 contemplated unit titles – or ‘strata’ titles – for high-rise apartments in Auckland, Wellington and Christchurch. However, surveyors and architects took advantage of the legislation and unit-titled properties are now commonly found throughout the country.
Queenstown is an example, with its high concentration of unit-title properties including commercial and retail, hotels, apartments and many two- or three-unit residential developments.
The new law will bring significant change in the process for selling a unit-title property. Extensive information must be disclosed to the purchaser before the contract is formalised.
This includes the Certificate of Title, body corporate information, Land Information Memorandum or LIM and other essential paperwork.
After the contract is established, the buyer is entitled to request further information from the seller before completing the purchase.
Failure to supply the disclosure information entitles the buyer to either delay the purchase until it is supplied or, alternatively, cancel the sale and purchase agreement altogether.
All unit title bodies corporate – the group of unit owners in each development – are also affected by the new law.
An annual meeting must be held before the end of 2011. New maintenance funds and long-term maintenance plans must also be formulated.
The new legislation requires details of those maintenance funds and plans to be included among information passed over to prospective purchasers.
While parts of the legislation are clearly directed towards protecting purchasers, the new legislation also requires every body corporate to have good record-keeping, maintenance planning and consultation between unit owners.
Lawyers and realtors are working together to ensure an understanding of the new legislation and its requirements.
Sellers of unit title properties and body corporate secretaries are also encouraged to obtain advice before the new law comes in.
Clark Pirie is a partner at Queenstown law firm Mactodd