Most apartments, townhouses and other units in New Zealand are unit titles. You own your unit and its interior, and you share the building, land and common areas with everyone else in the development. The shared side is run by a body corporate, and what it does, and what it costs, affects your budget as much as the purchase price does.

What a body corporate does

Under the Unit Titles Act 2010, the body corporate is made up of all the unit owners. It is responsible for the common property: the roof, exterior walls, shared drains, lifts, car parks, gardens and so on. It usually insures the building, arranges maintenance, sets a budget and collects levies from each owner. Some developments hire a body corporate manager to do the day-to-day work.

Levies: ordinary and special

Owners pay two kinds of levy:

  • Ordinary levies cover the annual operating budget: insurance, cleaning, power for common areas, gardening, management fees and routine repairs. They are set each year and usually paid in instalments.
  • Special levies are one-off charges for work the budget doesn't cover, such as re-roofing, re-cladding or a lift replacement. A large special levy can arrive a few months after you've bought, so it's worth asking whether one is coming.

Levy amounts are split between units according to unit entitlements, which are set out in the unit plan. A bigger or more valuable unit usually pays a larger share.

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Documents to ask for before you make an offer

Ask the agent, or the seller's lawyer, for the body corporate records. Read them, don't just skim the summary:

  • The rules, including any restrictions on pets, short-term letting, renovations, parking and noise.
  • The current budget and the last few years of actual spending, to see whether levies have been rising.
  • The long-term maintenance plan. This is the body corporate's forward plan for major repairs and replacements. Check which items fall due in the next five to ten years and whether the funding for them looks realistic.
  • Minutes from recent committee and general meetings. These often reveal disputes, leaks, legal advice or planned work that hasn't reached the budget yet.
  • Insurance details, including the excess and what the policy covers. Ask whether it is for the building only.
  • Any building defect or weathertightness history, and whether repairs were completed and signed off.

Your lawyer should check the disclosure documents against the Act and the unit plan. Don't rely on a summary from the agent alone.

Insurance: what you cover and what the body corporate covers

The body corporate normally insures the building itself. You are usually responsible for insuring your own unit's interior fittings, floor coverings, contents and personal liability. Confirm this with the insurer, because the split can differ between developments. Your lender will also want to see cover in place before settlement.

Questions to ask at an open home

  • What are the current ordinary levies, and when are the next ones due?
  • Are any special levies planned, or have any been charged in the last few years?
  • Are there any active disputes, claims or repair projects?
  • Is the building insurance up to date, and when is it next renewed?
  • Does the body corporate have a manager, and how often do the committee meet?

How this fits into the buying process

Body corporate documents usually arrive as part of the due diligence you do before your conditions expire. Set a deadline for reading them, the same way you would for a LIM or a building inspection. If they show a large upcoming special levy or an unresolved defect, that's a reason to renegotiate or walk away. For the other reports to order, see the building inspections guide and the LIM reports explained post.

The rules in the Unit Titles Act have been updated in recent years. Check the current text on legislation.govt.nz, or ask your lawyer, before relying on any detail here.