30-12-1899

The ruling body

1. News
2. 1999
3. December

NZ Herald

Rounding off our series on buying apartments, Catherine Smith takes an in-depth look at body corporates - which make the rules that apartment-dwellers live by.

Some Aucklanders know their stuff when it comes to buying apartments. But many new apartment owners have no experience of dealing with a strange beast called the body corporate.

Martin Dunn, of City Sales, who has been selling apartments since 1991, explains: 'Basically, a body corporate is an organised system of maintenance - a pretty necessary discipline.'

A portion of the annual cost of running the complex is charged to each owner, either annually, six monthly or quarterly, he says. Typical costs include building insurance, maintenance of lifts and facilities (with a provision) and the upkeep of common areas, such as car parks, recreation facilities, gardens and lobbies.

Body corporate fees can vary enormously, says Dunn. For example, water is often included in the body corporate levy, as well as Sky TV and the cost of an on-site manager.

While some smaller complexes manage their body corporate responsibilities through a volunteer committee, larger developments are increasingly using professional body corporate managers.

Gaylene Rudolph, divisional manager for Bayleys Property Services, runs such as operation in Auckland.

'The running of a body corporate is governed by the Unit Titles Act,' she explains. 'The body corporate secretary works under a secretarial agreement with the owners. He or she assists with the management of all financials and preparation of budgets, arranges meetings - including an annual general meeting for the owners - monitors maintenance contracts, works alongside the committee and the building manager on maintenance issues and assists with the enforcement of the body corporate rules.'

Dunn and Rudolf agree that the key to a good body corporate is a long-term maintenance plan, and that funds are set aside for jobs that need doing once every five or 10 years, such as painting or repairing paths or driveways. Initial body corporate rules are drafted by the developer and are specific to a complex. For example, some buildings allow pets, others forbid residents to hang clothes to dry on the balcony, or have restrictions on exterior decor, courtyard landscaping and visitor parking. Rudolf says landlords need to make their tenants aware that they are bound by the body corporate rules, but that it is the owner who carries responsibility.

Larger complexes often contract a building manager, who primarily looks after the common areas. Rudolf suggests that this does not generally mean managers are there to do private work on individual apartments, although owners and building managers may come to private arrangements.

The Unit Titles Act requires that an annual general meeting be held, and Rudolph advises owners that it is worth attending, as this is where financials are presented and approved. It is also the place where issues of concern regarding the building are raised.

Some handy tips to bear in mind before you buy a new apartment:

• Ask to see a copy of the Body Corporate Rules of the complex. These will spell out any restrictions and obligations you may have.
• Have a look at the budget for the complex. Check to see what is and isn’t included (such as water rates).
• Ask how the body corporate will be managed. For example, will the daily running be contracted to a professional body corporate manager, or will you have to be part of a volunteer committee? How much will this cost?
• Enforcing the rules of a body corporate is generally the job of the secretary, sometimes the building manager or a committee member. If you don’t like the rules, there are very specific steps you must take to change them, which are outlined in the Unit Titles Act. You will need to discuss this with your solicitor.
• Section 36 certificate: This is to be supplied whenever a unit is sold or mortgaged. This is a certificate of proprietor’s liability. Your solicitor will request this certificate from the vendor’s solicitor.

When buying an apartment that is already occupied, Rudolf suggests, in addition to the above:

• Get a copy of the minutes of the last AGM of the body corporate, which will include a full set of the financials. A vendor should be able to provide you with these. It will give you an idea of the issues raised and how they are to be resolved.
• Clarify if there is a building manager, and what sort of contract is in place. Is he full time or part time? Can you pay him to do extra work for you?
• Clarify if there is a body corporate committee in place, and who is on it. Can you get a sense of their preferences or working style from the minutes, or from talking to residents or the vendor?
• Ask to see a copy of the long-term maintenance plan. You could run it past a building inspector to see if it’s appropriate for the type and age of the building, to ensure there are no nasty surprises.