Body Corporate Definition of Terms
Unit attached to one or more Principal Units, this could be a car park or storage area.
Annual General Meeting (AGM)
Meetings of the body corporate are either annual general meetings (AGM) or extraordinary general meetings (EGM). An AGM must be held once every calendar year. These meetings are an opportunity for unit owners to exercise their collective property rights. The body corporate discuss issues of joint concern and unit owners vote on a range of matters affecting the development.
Sometimes referred to as body corporate Levies, the body corporate will determine the annual contributions payable by unit owners in respect of their unit, the levy is the share which each owner pays towards the annual budget. A body corporate might also raise a "special levy" for a special project. An owner’s contribution to the amount levied by the body corporate is determined by either utility interest or ownership interest. The timing of payment of the levies are fixed by the body corporate.
When you purchase a unit, you automatically become a member of the body corporate. All unit owners in a unit title development make up the body corporate. The body corporate is responsible for a range of management, financial and administrative matters relating to the common property and the unit title development as a whole. If you are a unit owner, you are also a member of the body corporate.
An estimate of the costs that the body corporate will incur in the coming financial year, which is prepared by the body corporate Administration and is approved by owners at the AGM.
Once a budget is approved, it becomes the basis of the levies that each owner pays, the amount payable per unit is usually calculated using the Utility Interest.
Each body corporate over 10 members must have a committee unless it decides not to by special resolution. Owners are elected at an AGM and govern the body corporate in accordance with the Act. A body corporate committee is a subset of the body corporate and is elected by the body corporate. The body corporate may delegate some of its duties and powers to a committee; particularly duties that relate to the administration and management of the development.
Common Areas/Common Property
These are the areas owned collectively by all unit owners and are shown on the Unit Plan. These areas are the responsibility of the body corporate (all owners within the development). The area that is private is the responsibility of the owner.
Extraordinary General Meeting (EGM)
An EGM is any general meeting of the body corporate other than the AGM, the meeting can only be called by certain members of the body corporate, this is set out in the Act.
The body corporate is responsible for organising material damage insurance cover for the buildings Additional covers which are generally obtained include public liability, office bearer’s cover and construction cover for works. Owners are responsible for arranging their own contents insurance policy.
All unit owners, occupiers, tenants and the body corporate must follow the body corporate operational rules that apply to their development.
The body corporate operational rules help the body corporate govern the unit title development. All unit owners, occupiers, tenants and the body corporate must follow the body corporate operational rules that apply to their development. The rules typically cover items such as parking and storage on the common property.
Ownership interest is determined according to the relative value of each unit as a share of the development as a whole. The value must be set by a registered valuer. Ownership Interest is the same figure as Unit Entitlement.
A unit is what each Owner owns, this may or may not include a share of common areas.
The term previously used under the Unit Titles Act 1972. When a unit title development was formed, all units were valued in relation to the total complex and to each other. The total value of each unit was divided by the total value of the development to give a percentage, which was the "Unit Entitlement" of each unit. The unit entitlement of a unit determined what proportion of the budgeted costs would be paid by the owner of that unit, and the voting power of that unit. The unit entitlement of all units in a development is shown on the unit plan. This concept has been replaced in the Unit Titles Act 2010 by Ownership and Utility Interest.
The unit plan shows the boundaries of the principal units as well as any accessory units and common property in the development. A copy of the unit plan can be ordered through the LINZ website.
Residential unit title developments are typically apartment blocks, townhouses and suburban flats. Commercial and industrial types include office blocks, industrial or retail complexes and shopping malls.
It is not uncommon for large complexes to have one water or power meter. Individual meters to measure consumption per unit may also be connected. The body corporate can allocate costs to units based on those meter readings.
By default, the utility interest of a unit is the same as the ownership interest. The body corporate may, however, decide to apply a different method of calculating utility values. For example, 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).