Body Corp legal obligations

[Merlot Mike]

Hi all, I'm looking a buying a brick n tile type unit in Auckland. The units are all in a BC the cost of which apparently is just the insurance for the whole place. There is no official secretary or long term maintenance plan in place. The common property is just a driveway and the units each share a concrete block wall but they are offset so each units roof is not connected to the next.

I read everywhere that BCs are "legally obligated" to have, for example, a long term maintenance plan, but what are the actual consequences if one is not in place?

[eri]

are you sure it is a proper BC and not just what the agent is calling an unofficial owners body?

seem to remember you don't need one below 10? members

[Merlot Mike]

It's a Strata title and the complex has a BC number so yes.

[eri]

call and ask BC

[Merlot Mike]

Do you mean the BC manager? There is none - the BC is being run in-house.

[artemis]

If 9 or fewer units there doesn't have to be a BC committee. But somebody has to be responsible to meet the specific disclosure requirements for a prospective buyer. Ask the seller or their agent.

Yes there must be a long term maintenance plan, and a long-term maintenance fund as well unless the latter is specifically decided against by (I think) a special resolution. If there isn't one I would think there are no consequences until something goes pear shaped or someone complains or both. That could end up in the Tenancy Tribunal or Disputes Tribunal and I guess the consequences would depend on the issue. However, there is certainly a risk for owners if that happens.

Suggest check about common property. What you said (driveway only) is not usual. It is usual for common property to include everything except what is inside each principal/accessory unit from the mid point of the building envelope inwards.

[Merlot Mike]

OK thanks for the info Artemis. The other thing is apparently the individual owners have all had their own rebuild estimates done for insurance (some by builders, others quantity surveyors) with wildly varying estimates resulting for what are similar units. They have then all been lumped under one policy, does this sound weird?

[artemis]

Sounds like at least some legal requirements are not being met. Probably not understood. As mentioned may not be a problem unless (until) something goes wrong.

Yes that insurance could be an issue if something happens and the cost is not what that owner expects so all owners will be impacted.

Do the owners realise the policy won't cover full reinstatement if a unit say burns down. The policy will only cover the common property as that is what is owned by the BC as the policy holder. (Unless the policy has special conditions which I doubt.)

[Merlot Mike]

Sorry... I've misrepresented the situation... the building envelope is common property too presumably, I was just pointing out that there were no lifts or gyms etc...
If I buy the place I would be keen to rally the neighbors and put a maintenance plan in place. How could I persuade potentially reluctant owners that the BC would be better off with one in place when they have been without one for so long; what would be some good ammo for my argument?

[artemis]

Suggest start by talking to the person who signed off the pre purchase disclosure, if you can. That person represents the BC, at least to some extent. Find out what that person knows (and thinks) about legal obligations, the insurance situation, whether there is a BC committee and the status of the required BC meetings / minutes / accounts / levies. Read up about special meetings in the Unit Titles Act.

If there is a real estate agent, either do the above through that person in writing or make sure they are formally notified so they can make the correct disclosure to other prospective buyers. This could work for you as others are likely to be put off.

[Merlot Mike]

Well I went ahead and bought the place. I then approached bodycorpservices.co.nz who offer a one-off BC set up service. They came in and sorted out the legal stuff, setting up a bank account, voting in a Chairperson etc. The neighbours took a bit of convincing but the cost of doing this was made back quickly with our savings in insurance as we now have a proper BC insurance policy in place which is cheaper that the arrangement from before. All running smoothly now.

[eri]

thanks for the update

great to round out problems

with solutions