Body Corporate Definitions of Common Terms provide peace of mind for both current and potential investors.
A unit is what each owner owns. It will normally be a physical structure (such as an apartment or carpark), but can be simply an area of surveyed space within which improvements may or may not exist.
A levy is the share which each owner pays towards the Body Corporate’s annual budget. The timing of payment of levies and the amount of levies are fixed by the Body Corporate, generally at its annual general meeting (AGM).
The Act provides that the share of the Body Corporate expenses each owner pays is calculated by ownership interest (formerly unit entitlement). This is the comparative value of each unit in comparison to all other units in the complex, and is initially assessed by a valuer at the time the unit title plan is deposited.The new Act brings a potential new method of calculations being “Utility Interest” (see below).
The depositing of the unit plan with Land Information NZ is what forms the Body Corporate. The plan defines the units, accessory units (such as carparks and storage units) and the common areas. It may also define future development units.
Every year at the AGM, proprietors approve the expense budget for the coming year. It is the expense budget which forms the basis for assessing the amount of each owner’s levy for the year. Boutique prepares preliminary budgets for your Body Corporate or committee, however approval of the final budget is a decision made by the owners at the AGM.
The new Act recognises unit entitlement is not always an appropriate measure of cost allocation. Provisions exist for costs to be allocated by utility interest, which is the relevant benefit the expense item delivers to individual owners(eg. ground floor owners may not be required to contribute to lift costs).
It is not uncommon for large complexes to have one water or power meter. Check meters to measure consumption per unit may also exist. The Body Corporate can allocate costs to units based on check meter readings.
The Body Corporate is responsible for placing full replacement insurance cover for the buildings and improvements. Additional covers which are generally obtained include public liability, landlord’s fittings and fixtures, loss of rents from an insurable event, alternative accommodation for owner occupiers, statutory liability, office bearer’s cover and construction cover for internal works or refurbishment. Boutique has negotiated a unique policy with its major broker, ACM Ahlers Limited, that can provide additional benefits to owners at best market rates.
AGM - ANNUAL GENERAL MEETING
Each year the Body Corporate must hold an annual general meeting, which meeting determines the financial position and direction of the Body Corporate. Issues arising between annual general meetings may be discussed and resolved at extraordinary general meetings. The committee will determine the timing of AGMs and EGMs.
Each Body Corporate over 10 members must have a committee which is responsible for running the Body Corporate between general meetings. How owners are elected to the committee is provided for in the Body Corporate rules.