Unit Titles Act – final changes came into effect on 9 May 2024

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Special Counsel
The final set of changes intended to improve how unit titles are managed came into force on 9 May 2024. This means the new rules around long term maintenance plans, body corporate contracts, regulator enforcement provisions and new regulations must now be complied with.  

The final round of changes in the Unit Titles (Strengthening Body Corporate Governance and Other Matters) Amendment Act 2022 came into force on 9 May 2024 (2 years from the date of Royal assent).

The changes that came in force on 9 May 2024 were:

  • all changes to requirements for long-term maintenance plans and funds;
  • the requirement for a contract between a body corporate and a body corporate manager to contain specific terms;
  • the enforcement provisions for the regulator; and
  • the provisions which require regulations to be made.

Further information on each of these is set out below.

New regulations

The Unit Titles Amendment Regulations 2024 amending the Unit Titles Regulations 2011 (the Regulations) are now in force implementing some of these new changes.

Long term maintenance plans and funds

The general position in relation to long term maintenance plans (LTM Plans) and long term maintenance funds (LTM Funds) remains the same, that is:

  • all body corporate must establish and maintain a LTM plan – there is no ability for a body corporate to ‘opt-out’ of this by special resolution; and
  • bodies corporate must establish and maintain a LTM fund unless the body corporate resolves by special resolution not to.

There are some amendments to the requirements, form and content of the LTM Plans and LTM funds, including:

  • all body corporate must have an LTM Plan that covers at least a 10-year period, except for large unit title developments which must cover a 30-year period (see below); 
  • LTM Plans must now summarise the current state of the common property and state the sources of funding for the plan; and 
  • a body corporate which resolves not to establish a LTM fund will now be required to review that decision annually in accordance with the Act.

LTM Plans for large unit title developments

LTM Plans for large unit title developments (10 or more units) must cover a 30-year period and must be reviewed every 3 years (or as soon as is practicable after the body corporate becomes aware of any matter that will have a material impact on the LTM plan).

A body corporate of a large unit title development must (unless it resolves by special resolution not to) consult with building or other suitably qualified professionals if it considers it necessary or appropriate, when developing or reviewing the LTM plan.

Large unit title developments had until 9 May 2024 to ensure their existing LTM Plans or plans that are under review, met the new requirements.

Body corporate management agreements

From 9 May 2024 contracts or agreements setting out the terms of engagement with body corporate managers must include the following terms:

  • the manager’s reporting requirements to the body corporate on the performance of the manager’s functions;
  • the requirement to comply with the body corporate manager code of conduct (prescribed by Regulations);
  • the requirement for reviews of the manager’s performance at specified intervals, including performance targets;
  • the grounds for termination and the process for doing so, if met;
  • the role, if any, of the manager at general meetings of the body corporate;
  • records, funds, or other things relating to the body corporate that must be returned by the manager to the body corporate when the agreement ends or is terminated; and
  • the date by which things must be returned.

Electronic voting rules and procedures

The Regulations provide procedures for electronic voting and for remote attendance at general meetings.  This includes that a body corporate must take reasonable steps at a general meeting to:

  • provide facilities for unit owners to attend meetings by a remote access;
  • voting by electronic means; and
  • verification of the identity of those voting electronically.

Voting records including proxy forms and votes must be retained for 28 days after a general meeting or a vote of resolution without general meeting.

New regulatory powers

From 9 May 2024, MBIE has a new monitoring function and is given additional enforcement tools to improve compliance with the Act – including the ability to apply to the Tenancy Tribunal for a pecuniary penalty, issue improvement notices where they believe the Act or Regulations have been contravened, enter onto and inspect unit title developments, require bodies corporate and body corporate managers to produce documents (see below), and issue proceedings.

Information retention

The Regulations prescribe that a body corporate must retain certain documents for at least 3 years in case requested by the regulator, which include:

The following documents are already required to be provided in  pre-contract or pre-settlement disclosure statements, and will now also need to be provided to the regulator on request:

  • details of all body corporate funds and bank accounts (i.e. bank statements);
  • financial statements and audits;
  • valuation reports on any assessment of ownership interest;
  • completed copies of some forms and certifcates give under the Regulations;
  • levy information;
  • LTM plan and the next review date;
  • remediation, earthquake-prone and land defect reports;
  • register of all unit owners;
  • notices, agendas and minutes of body corporate and committee meetings;
  • contact details for any current body corporate or committee chairperson or current or past body corporate manager 
  • details of all current insurance policies, including annual insurance certificate; and
  • details of any proceedings in any court or tribunal that the body corporate is involved in;

The following additional documents must now be retained in case requested by the regulator:

  • notices from body corporate to owners regarding entering a unit;
  • notice of designated resolution;
  • notices of delegation from the body corporate to the body corporate committee;
  • report from the body corporate committee to the body corporate on the exercise of the duties and powers delegated to it;
  • written agreement of body corporate manager’s terms of employment/engagement;
  • body corporate operating rules and any amendments;
  • records related to any current warranties from third parties for common property, assets owned by the body corporate, or building elements and infrastructure;
  • notice of resolution to be decided without general meeting;
  • notice requiring an owner to sign any document to carry out a resolution;
  • conflict of interest register for the body corporate committee;
  • conflict of interest register for the body corporate manager; and
  • service contracts.

Legal costs in the Tenancy Tribunal – no changes

One of the proposals that was consulted on in August 2023 will not be taken forward as most submitters did not support regulations being made. The Government is not proposing to make regulations to determine legal costs for unit title claims in the Tenancy Tribunal. Legal costs will continue to be determined by the Tenancy Tribunal as they are currently.

If you are wondering how these changes affect you as an owner of a unit title, please get in touch with one of our experts Alysha Hinton or Bridget Cameron.

Disclaimer: The content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.

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