Why your body corporate home is not necessarily your castle
For many New Zealanders who grew up in a home on a quarter acre section it takes time to adapt to the complex issues that can arise from owning and living in an apartment building. One of these issues is the extent to which owners have control over their own apartments and, in particular, who is responsible for repairs and maintenance to the apartments. In this article we discuss the way in which the law relating to work of this nature has developed from a position of some autonomy for unit owners to one of collective responsibility.
The Unit Titles Act 1972 introduced laws to govern bodies corporate. To a large extent the Act gave unit owners control over their own unit space. It allocated responsibility for the repair and maintenance of a unit to the owner and responsibility for common property to the body corporate. The Act granted the High Court the power to sanction schemes for the repair of buildings, including cost apportionment, but in the leading Court decision, Tisch, the Court of Appeal ruled scheme cost allocations should only depart from the Act where this was necessary to achieve fairness between the parties. As a result, most Court decisions on schemes under the 1972 Act allocated the cost of unit repairs to the owners of the unit and the cost of common property repairs to the body corporate.
In this way, although the owners collectively managed the common property, they exercised a degree of autonomy over their own apartments.
The Unit Titles Act 2010 was passed in response to the leaky building crisis and the difficulties that bodies corporate often faced in undertaking remedial work to the exterior of buildings, in particular to unit property. The 2010 Act gives bodies corporate the power and the obligation to repair and maintain all building elements which relate to or serve more than one unit, irrespective of whether these building elements are within unit or common property. The costs of these works are payable by all unit owners and may only be reapportioned to individual owners in certain circumstances. This change in the law has been reflected in a number of recent Court decisions:
• In The Links the Court approved a body corporate scheme to apportion all weathertightness repair costs according to utility interest in circumstances where the balconies and at least part of the exterior were within unit property but the work benefitted the building as a whole.
• In Sebel Suites the Court held that weathertightness repairs to a deck over a restaurant in Auckland’s Viaduct Harbour, which was within unit property, was payable by all owners in accordance with utility interest.
• In Otway the Court of Appeal held that repairs to decks within unit property over shops in a Mt Maunganui tower block were payable by all owners in accordance with utility interest, as the repairs were important for the storm water system for the entire building and were of benefit to all owners.
• In Pavilions the Court approved a body corporate scheme for repairs (including a reclad) to a 4 level tiered apartment building in Mt Maunganui in accordance with utility interest, on the basis the works addressed the weathertightness and compliance of the building as a whole.
This case law reflects the reality that building elements in an apartment building will often be interlinked and that significant remedial works will often benefit all of the owners. In these situations the interests of the owners are interdependent so that the maintenance of the building is necessarily a collective responsibility. In many ways, a body corporate of this type is more accurately described as a group ownership arrangement rather than a collection of individual properties. This may mean that your body corporate home is not necessarily your castle, in the sense that there is not the same level of control as a stand alone home. But that is not necessarily a bad thing. It is a different form of property ownership which needs to be managed in its own way.
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, section 74 schemes and provide other specialist advice. For assistance please contact Gareth Lewis on (09) 375 2376 or Gareth.Lewis@grimshaw.co.nz.