Body Corporate Law Reform a Balancing Act

After calls for law reform to the Unit Titles Act (NZ Herald) the Unit Titles Working Group Report has been presented to the Minister for Building and Housing (Radio NZ).

The Minister will need to separate the reforms which genuinely improve the legislation for all owners from those which favour certain groups of owners only.

The proposed reforms to the pre-purchase disclosure regime are much needed. Information as to body corporate liabilities ought to be provided to prospective purchasers at the pre-contract stage so that purchasers are in a position to make informed decisions before they negotiate a purchase price for the property and commit to the purchase.  The current regime whereby important information is not provided until after the agreement is unconditional or only by way of additional disclosure does not provide adequate protection to purchasers.

There has been discussion about the use of proxies at body corporate meetings. Some use the emotive term "proxy farming" and suggest that proxies enable "abuses" of the body corporate system (NZ Herald).

The use of proxies is a process which enables owners who are unable or choose not to attend a meeting to participate in a body corporate vote. If a large number of proxies are given to one person and that person is able to pass a resolution or resist a resolution using those proxies that is the outcome of a democratic process.  One can sympathise with an owner who is outvoted, whether by a majority in person or by proxy, but that is a feature of owning a property in a unit title development.  The owner in the minority has certain rights under the Act but otherwise he or she has to abide the wishes of the majority.

To restrict the ability of owners to appoint proxies to vote at meetings disadvantages those who do not attend meetings, such as overseas based owners, and favours those owners who attend meetings in person. In considering the interests of the body corporate as a whole this may not be considered the correct balance.

Grimshaw & Co regularly acts for bodies corporate. We are experts on the Unit Titles Act and are well placed to advise your body corporate on the validity of body corporate rules, repair and maintenance obligations and provide other specialist advice to body corporate committees.  For assistance please contact Gareth Lewis on (09) 375 2376 or gareth.lewis@grimshaw.co.nz