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Do we really need a body corporate for two adjoining flats?

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  • Do we really need a body corporate for two adjoining flats?

    Hi - does anyone out there have any experience with running a body corporate for a situation when there are only two flats on a property?

    And specifically, has anyone been able to get out of setting one up, on the basis of there are just two flats?

    As background, as most of you probably know, the Unit Titles Act (2010) now makes an actively managed Body Corporate mandatory, for unit title developments. We are a historic two flat property dating back decades.

    The new law seems over the top for just a two flat property. The final straw was the fact that (under the 2010 legislation) we need to get a bank account set up for the two flats, despite the fact that there is no need for such an account, and it will have no money in it. And now the bank is saying that we need to first get an IRD number. We are actively exploring this option, but the IRD aren't particularly easy to get advice on with respect to this point (they don't even seem to have any webpage on this topic).

    Also the body corporate secretary (me!) needs to submit their personal IRD number when applying for the body corporate IRD number, and I assume it gets associated with the body corporate's IRD number. Would this complicate my own yearly tax returns?

    Thanks for any advice people can give!

  • #2
    Google Unit Titles Act. I seem to remember there being a get out clause for under a certain number of units.

    Comment


    • #3
      Yeah, I don't think you do, for that many.
      Is it cross-leased?
      My blog. From personal experience.
      http://statehousinginnz.wordpress.com/

      Comment


      • #4
        Check out this consultation document. Almost certainly there are changes coming and soonish, but for your purposes the document clearly sets out what is currently required for most of your issues- including for small complexes. Simpler than the Act. (The changes are likely to impact larger complexes BTW.)

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        • #5
          something like above 10?

          you must have BC

          but below it's optional

          BC of 2 sounds like extravagant luxury

          you'd probably need both sides to agree to dissolve

          and the BC co is hardly going to help
          have you defeated them?
          your demons

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          • #6
            Thanks Artemis - that's a very useful guide!

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            • #7
              You wouldn't be the first person I've seen asking this question over the last year or two, especially since BC's had to come up with long term maintenance plans. My general thoughts are that, for flats that aren't on top of each other, the best solution is to look at converting to freehold.

              With flats on top of each other, you could possibly convert to freehold stratum titles but I'm unsure how your local Council would view it.....you'd need to talk the options through with a surveyor.

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              • #8
                Do we really need a body corporate for two adjoining flats?

                Hi Ivan - Interesting you should say that.... I've just looked at the paperwork, and it states that the flats are stratum estates "in freehold".

                Does this have any implications for the need to have a Body Corporate?

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                • #9
                  I split one building into 5 units around 6 years ago. I needed to have a BC put in place.

                  But it doesn't cause me any problems or extra expense.

                  Don't recall having to provide an IRD number. Certainly haven't opened a bank account under the BC.
                  Squadly dinky do!

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                  • #10
                    There are plenty of low unit number developments that do, Davo, then one group of say 3 of the 5 effectively takes over the BC and discovers they can do as they please eg (from the experiences of clients) pay themselves exorbitent management fees for beer money and refuse to provide accounts to anyone else, or one owner gets all stubborn about paying anything without proof to the nth degree of why any expenditure is needed at all, regarding the BCorp as akin to a foreign enemy invader rather than something they themselves constitute a part of. Or two of the five are overseas landlords that never respond to communications and don't see why anything should be paid on or to anything other than rates/insurance.

                    As long as you have a small in number bunch of reasonable people that can agree on maintenance issues and are easy to get in touch with, completely ignoring all the provisions of the Unit Titles Act can work ok. Until it doesn't, of course.

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                    • #11
                      Originally posted by kiwi99well View Post
                      Hi Ivan - Interesting you should say that.... I've just looked at the paperwork, and it states that the flats are stratum estates "in freehold".

                      Does this have any implications for the need to have a Body Corporate?
                      No, that's just the normal unit title description, not what I'm thinking of, which is....(having checked the name).....fee simple stratum. It's a type of freehold title, very rarely used, most often in my experience for things like air bridges or pedestrian underpasses.

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                      • #12
                        Originally posted by eri View Post
                        something like above 10?

                        you must have BC

                        but below it's optional

                        BC of 2 sounds like extravagant luxury

                        you'd probably need both sides to agree to dissolve

                        and the BC co is hardly going to help
                        Where in the act does it say that?

                        Originally posted by Davo36 View Post
                        Certainly haven't opened a bank account under the BC.
                        But does the act allow that (no bank account) when it says 'you MUST'?

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                        • #13
                          Originally posted by Wayne View Post
                          But does the act allow that (no bank account) when it says 'you MUST'?
                          Who knows, who cares. I own all 5 titles for now, so just run it the same way I always have.

                          If I sell off one or more unit, then an actual BC operation would have to be put in place I guess.
                          Squadly dinky do!

                          Comment


                          • #14
                            Originally posted by Davo36 View Post
                            Who knows, who cares. I own all 5 titles for now, so just run it the same way I always have.

                            If I sell off one or more unit, then an actual BC operation would have to be put in place I guess.
                            I sort of agree.
                            I read the Act last night (such fun) but can't see a rule for small Unit developments.
                            It says you MUST have a bank account to cover a bunch of operational stuff (115) but if you don't have any of those expenses why would you.
                            The BC I am part of hasn't spent any money in the 10 yrs I have been part of it - insurance is the only cost and that is arranged as a group but paid seperately so no need for an account.

                            Probably should have a long term maintenance plan but everyone is happy without one.
                            Seems to be a case where the Act could make things harder where it doesn't need to be - in my case.

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