Unit titles are a type of property commonly seen in apartment or multi-unit developments. They are subject to the Unit Titles Act 2010 and are governed by a Body Corporate comprised of each unit owner. On the sale of a unit title property, the vendor must provide the purchaser with certain information about the unit and the development.

The Unit Titles (Strengthening Body Corporate Governance and Other Matters) Amendment Act 2022 (Amendment Act) came into effect on 9 May 2023 and introduced changes that:

• require more information to be provided to purchasers of unit title properties; and
• expand the rights of purchasers.

Improvements to Disclosure

There are two types of disclosure to purchasers that continue to be relevant under the Amendment Act:

1. Pre-Contract Disclosure Statement – required to be provided before the contract is entered into; and
2. Pre-Settlement Disclosure Statement – required to be provided no less than five working days before settlement.

Prior to the Amendment Act, the Pre-Contract Disclosure Statement information was often unhelpful for potential purchasers. The most important information was provided in the Pre-Settlement Disclosure Statement. By then the purchaser is usually already unconditionally bound to complete the purchase of the property.

The information provided initially in the Pre-Contract Disclosure Statement is now far more expansive and includes:

• financial statements and audit reports for the last three years of the Body Corporate;
• details of maintenance and proposed works on the development for the next three years;
• any earthquake prone issues concerning the development;
• whether the Body Corporate is involved in any proceedings and details of those proceedings;
• any remediation reports for the last three years; and
• Body Corporate notices and general meeting minutes for the last 3 years.

Existing requirements to disclose certain information have also been widened. For instance, disclosure of weathertightness issues only previously applied to claims under the Weathertight Homes Tribunal or other civil proceedings. Now, purchasers must be made aware of any known weathertightness issues that have not been fixed, as well as any weathertightness issues that have been fixed, but were not subject to a claim.

Purchaser Rights

The purchaser may now elect to delay or cancel settlement under certain circumstances where the Pre-Contract Disclosure Statement and/or Pre-Settlement Disclosure Statement is incomplete, incorrect or has not been provided. Previously, the purchaser could only cancel (or delay settlement of) an agreement for sale and purchase if disclosure was not provided by the vendor within the required timeframe.

Summary

The Amendment Act has brought in a number of changes and if you need assistance with your unit title sale or purchase please do not hesitate to contact Chris Egden, Principal (DDI 03 3438584 / chris@mmlaw.co.nz) for assistance.