The New Act was passed into law in April 2010. It does not however become operative until the regulations are promulgated. This is expected to occur in late 2010 or early 2011. The Act brings significant changes which will impact on the governance and operation of most Body Corporates. For a summary of some of the significant changes

Sinking funds

The preparation of a long-term maintenance plan is mandatory for all Body Corporates, and saving in accordance with that plan is also mandatory unless a special resolution (i.e. 75% majority at a general meeting) resolves otherwise.

Voting

Some matters which previously required 100% of all owners to change (such as governance rules) can now be dealt with by way of special resolution (i.e. 75% of owners represented at a general meeting). Ordinary business will still be dealt with by way of a simple majority of those attending general meetings.

Building exterior

Maintenance of the exterior of the building and the structural elements is now the responsibility of the Body Corporate. Where the exterior of the building or the structural elements form part of a unit however, the cost related to the maintenance is to be oncharged to the proprietor. It is critical to determine what is common area and what is private.

Committees

The appointment of committees and a chairman is mandatory. Committees deal with the Body Corporate issues between general meetings.

Common areas

The Body Corporate, by special resolution, is now free to sell, lease or change the boundaries of the common area, thereby improving flexibility to the Body Corporate.

Onerous contracts

Contracts, often entered into by the developer when a complex is created, can be revisited and struck down if unduly onerous.  

Disclosure

Increased disclosure obligations on vendors and developers are required to increase transparency for purchasers.

Rules

All existing Body Corporates will need to review their rules or the rules will be automatically replaced by the new default rules 15 months after the Act comes into force. For assistance in designing a new set of rules, please contact the director, Craig Leishman, on 09 524 9785 or craig@bbcl.co.nz.

Dispute resolution

The New Act brings into effect new dispute resolution  procedures with the introduction of a tribunal similar to the Disputes Tribunal to resolve disputes between owners and the Body Corporate.