Unit titles were created by the Unit Titles Act 1972 to allow an individual to own a residential dwelling or
commercial/industrial unit within in a larger complex. It also provides a legal mechanism for multiple ownership
of the common spaces and facilities, such as driveways, communal gardens and facilities, air conditioning
systems and lifts.
The Unit Titles Act 1972 provides a stratum estate in fee simple to a defined 'space' bounded by dimensions of
height, length and breadth, being part of the larger title. Unlike Cross Lease ownership it is buildings based
rather than land based. Unit Titles can function in two dimensions, as in a standard development, as well as in
strata or airspace situations where it functions in three dimensions.
A unit title can be bought and sold, leased or mortgaged. It is made up of four components:
Body Corporate (BC)
This is made up of all of the individual owners within the complex. The BC arranges the upkeep, maintenance
and insurance for the building structure. It also pays for items such as repairs and maintenance of lifts and
mechanical services and payment of electricity for lighting common areas. These expenses are paid from
money levied from all of the owners.
There are various rules defining the powers and behaviour of the BC and these are set out in the legislation.
However, suffice to say that when the various owners are in disagreement, body corporate arrangements can
be a potential source of friction.
Unit Entitlement
This is an important concept as it defines the level of your financial contribution to the BC expenses. The Unit
Entitlement is a figure based on the value of your unit in a ratio to the value of all other units (both PUs and AUs)
and is determined and recorded at the outset on the unit plan by a Registered Valuer. Your Unit Entitlement
share defines your percentage liability for the costs of the Body Corporate (e.g. rates, insurance, and upkeep of
the common area). For example if you had 100/1000 share, you would be responsible to pay 10% of the above
costs.
Some Problems Associated Unit Title Ownership
1. Alterations & Extensions - One of the main difficulties arising from Unit Title ownership is that when
alterations and/or extensions beyond a unit envelope are contemplated all unit owners must agree. This can be
a big call in a large development.
2. Defaulting Owners - The Body Corporate can be somewhat powerless in dealing with a defaulting unit
owner. It can sue a unit owner for arrears of levies, but often this is not economically feasible. Dead beat
owners can inconvenience the other unit owners, who may need to make up the shortfall. The only real sanction
the Body Corporate has at its disposal is to charge interest (10%) on outstanding money. Other major breeches
of rules are enforceable by the court, along with the payment of damages.
3. Unit Entitlement ratios alter over time – the Unit Entitlements are set when the unit plan is first
registered. It is not at all unusual to find that some owners will have made substantial improvements to
individual properties over time and thus change the value ratio between the various units. Currently, there is no
provision in the Unit Titles Act to amend the Unit Entitlements. This is a problem if there is a major destruction
of the premises, such as a fire. The owners who have made these subsequent improvements might not get
back their fair percentage, as compensation is repaid according to the UE ratio.
4. Busy Bodies and Bush Lawyers - Friction caused by bickering between members of the Body Corporate
is all too common a problem. It is an unfortunate reality that many folk, who volunteer to be unpaid officers, are
often those with the most time on their hands. Hence many committees can be stacked with the above.
commercial/industrial unit within in a larger complex. It also provides a legal mechanism for multiple ownership
of the common spaces and facilities, such as driveways, communal gardens and facilities, air conditioning
systems and lifts.
The Unit Titles Act 1972 provides a stratum estate in fee simple to a defined 'space' bounded by dimensions of
height, length and breadth, being part of the larger title. Unlike Cross Lease ownership it is buildings based
rather than land based. Unit Titles can function in two dimensions, as in a standard development, as well as in
strata or airspace situations where it functions in three dimensions.
A unit title can be bought and sold, leased or mortgaged. It is made up of four components:
- Ownership of the major units. These are called Principal Units (PU) such as the major residence.
- Assessory Units (AU) such as a car park, courtyard or garden. Assessory Units must be associated with
a PU and cannot be sold off separately unless to the owner of another PU. For example: say you owned
a car park in a building you could sell it to another PU owner within the same building but not to an
outsider. - An undivided share in the ownership of the common property as tenants in common. That is the share of
the common areas such as driveway, lifts, communal gardens, etc. - An undivided share in the ownership of the units if the unit plan is cancelled.
Body Corporate (BC)
This is made up of all of the individual owners within the complex. The BC arranges the upkeep, maintenance
and insurance for the building structure. It also pays for items such as repairs and maintenance of lifts and
mechanical services and payment of electricity for lighting common areas. These expenses are paid from
money levied from all of the owners.
There are various rules defining the powers and behaviour of the BC and these are set out in the legislation.
However, suffice to say that when the various owners are in disagreement, body corporate arrangements can
be a potential source of friction.
Unit Entitlement
This is an important concept as it defines the level of your financial contribution to the BC expenses. The Unit
Entitlement is a figure based on the value of your unit in a ratio to the value of all other units (both PUs and AUs)
and is determined and recorded at the outset on the unit plan by a Registered Valuer. Your Unit Entitlement
share defines your percentage liability for the costs of the Body Corporate (e.g. rates, insurance, and upkeep of
the common area). For example if you had 100/1000 share, you would be responsible to pay 10% of the above
costs.
Some Problems Associated Unit Title Ownership
1. Alterations & Extensions - One of the main difficulties arising from Unit Title ownership is that when
alterations and/or extensions beyond a unit envelope are contemplated all unit owners must agree. This can be
a big call in a large development.
2. Defaulting Owners - The Body Corporate can be somewhat powerless in dealing with a defaulting unit
owner. It can sue a unit owner for arrears of levies, but often this is not economically feasible. Dead beat
owners can inconvenience the other unit owners, who may need to make up the shortfall. The only real sanction
the Body Corporate has at its disposal is to charge interest (10%) on outstanding money. Other major breeches
of rules are enforceable by the court, along with the payment of damages.
3. Unit Entitlement ratios alter over time – the Unit Entitlements are set when the unit plan is first
registered. It is not at all unusual to find that some owners will have made substantial improvements to
individual properties over time and thus change the value ratio between the various units. Currently, there is no
provision in the Unit Titles Act to amend the Unit Entitlements. This is a problem if there is a major destruction
of the premises, such as a fire. The owners who have made these subsequent improvements might not get
back their fair percentage, as compensation is repaid according to the UE ratio.
4. Busy Bodies and Bush Lawyers - Friction caused by bickering between members of the Body Corporate
is all too common a problem. It is an unfortunate reality that many folk, who volunteer to be unpaid officers, are
often those with the most time on their hands. Hence many committees can be stacked with the above.
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Innovation + Experience |
| PO BOX 9018, Wellington 6141 | phone: (04) 240-0124 | fax: (04) 232-4414 | email: valuer@ vcnz.co.nz Innovation + Experience |