A Body Corporate Guide For First-Home Buyers

11 August 2016

Commentary , Body Corporate

One of the by-products of high house prices in Auckland and our expanding population is that more and more first-home buyers are choosing apartment living as their primary step on the property ladder.

For Grimshaw & Co partner Gareth Lewis the trend comes with an added incentive for home-owners to be more aware of their responsibilities and rights when living in a shared structure.

“Compared to say 10 years ago, more and more people around town have either lived in apartments or have owned them and are a lot more people are aware of what’s involved in owning an apartment, how they’re levied and what their obligations are,” Gareth says.

“But its still quite common for first-home buyers to have their first home-buying experience in an apartment building.”

Gareth says the three main issues to consider when buying a unit in an apartment block are:

  1. Body corporate levies: People are used to paying rates and then separate amounts for power, maintenance etc but in an apartment building all of that is administered by the body corporate which bills you a significant amount per annum. Gareth says that getting used to the levies and understanding how these are calculated needs to be considered right from the outset.

  2. Building defects: Gareth warns against buying into an apartment building with weathertightness, fire rating or structural problems. “Unfortunately a lot of buildings in Auckland do have these issues and it can lead to very expensive repairs.” The best way to be pre-warned about any potential problems is to get body corporate minutes from meetings going back as far as possible. “It’s hard when buying into a unit title complex to identify all problems but you should look at the minutes. You have to accept the fact that you’re going to contribute to repairs in other parts of the building and for common property, but you tend to find that defects are common throughout a building and some issues will relate to more than one unit. So, yes, if someone on level five is having major deck problem or a ranch slider leaking, it could well be your apartment next.”

  3. Understanding that the majority rules: Although there are a lot of benefits in body corporate living – someone else taking care of maintenance and living close to the middle of town and all those services – Gareth says it’s important to realise that you are “sacrificing control” over many aspects of your property. “Generally the courts have said that you have to go along with the wishes of the majority – whether that’s over repairs or even painting it a different colour.”

So if you are buying into a body corporate should you seek to be involved in the body corporate committee? Gareth says there are two key requirements:

  • You must have plenty of time as understanding the obligations of a body corporate committee and handling body corporate affairs can be a very time-consuming process.

  • You must be the sort of person who is willing to seek advice from qualified professionals and not try to run the show yourself. Gareth says problems arise usually when body corporate committees makes decisions or carry out actions when they don’t have the expertise or are not independent. “It’s when someone has a brother who’s a builder who can carry out any work, or who takes on the cleaning contract, or who has a small amount of accounting experience or who thinks they know the law, that it becomes a problem. You must be willing to take advice where appropriate.”

Gareth Lewis is a Partner at Grimshaw & Co with expertise in construction claims, body corporate disputes and employment law. He is a Fellow of the Arbitrators and Mediators Institute of New Zealand and uses various forms of dispute resolution, including mediations and arbitrations. He has appeared in the Employment Relations Authority, WHT, District Court, High Court, Court of Appeal and Supreme Court, including interlocutory applications, trials, appeals, interim injunction applications and insolvency matters.