Property guidance by Quay Law
Property guidance by Quay Law
Quay Law · Unit title property
Buying an apartment or townhouse? We review your agreement, disclosure statement and body corporate records so you understand what you are buying before you commit.
Ian Mellett · Barrister and Solicitor
Review before you sign
Body corporate document checks
Auckland and throughout New Zealand
An apartment comes with more to consider
Buying an apartment or townhouse is not the same as buying a house on its own section. When you purchase a unit title, you are buying your own unit and, at the same time, a share in a building and a body corporate that you will own and run alongside every other owner.
That shared ownership brings real advantages. Maintenance of the building is organised collectively, costs are spread across all owners and many developments offer a lock and leave lifestyle that suits first home buyers, investors and downsizers alike. It also brings obligations that a freehold purchaser never has to consider: body corporate levies, operational rules, a long term maintenance plan and the financial health of a body corporate you have not yet joined.
The documents that reveal these matters are lengthy and technical. They tend to arrive at the point when you are under the most pressure to sign. At Quay Law we read them for you, explain what they mean and identify the issues that matter before you are committed.
Whether you are buying or selling, the guide below sets out how the process works and what to look out for at each stage.
Understand the ownership
A unit title is a form of ownership created under the Unit Titles Act 2010. It allows land and the buildings on it to be divided into separately owned units, with the remaining areas owned collectively. Apartments are the best known example, but many Auckland townhouses and terraced houses, and some commercial premises, are also unit titles. Understanding the structure is the first step to understanding the risk.
01
Confirm the boundaries of your unit, car park and storage before you make an offer.
When you buy a unit title, your record of title (previously known as a certificate of title) describes a principal unit. This is the apartment, townhouse or premises you will occupy. It may also include one or more accessory units, such as a car park, garage or storage locker. The boundaries of each unit are shown on the unit plan, which is deposited with Toitū Te Whenua Land Information New Zealand (LINZ).
Everything outside the units, which often includes the land, the structure of the building, lifts, stairwells, driveways and gardens, is common property. It is owned by the body corporate on behalf of all owners.
Each unit has an ownership interest and a utility interest. Ownership interest affects voting when a poll is taken. Utility interest generally determines your share of body corporate levies, and it may differ from ownership interest. Your lawyer should check both interests and how costs are allocated.
We recommend checking the unit plan carefully. It is not unusual for a buyer to assume a car park or courtyard is included, only to find it is common property, or an exclusive use area that they may use but do not own.
02
Check the levies, operational rules and shared maintenance responsibilities you will take on.
On the day your purchase settles, you automatically become a member of the body corporate. The body corporate is made up of every unit owner in the development, acting together. It is responsible for insuring the buildings, maintaining the common property, keeping proper financial records and enforcing the operational rules.
Day to day decisions are often delegated to a body corporate committee elected by the owners, and larger developments usually engage a professional body corporate manager. Major decisions, including the annual budget and levies, are made at the annual general meeting.
As a member you will be bound by:
You are not simply buying a home. You are joining an organisation with its own finances, history and personalities. The quality of that organisation will affect your costs, your enjoyment of the property and its value when you come to sell.
03
Ask your lawyer to confirm the title type. Not every apartment or townhouse is a unit title.
Most New Zealanders are familiar with freehold title, where you own the land and everything on it outright. A unit title differs in that you own your unit outright but share ownership of the land and common areas with other owners through the body corporate.
A cross lease is often confused with a unit title, but the two are quite different. Under a cross lease, the owners hold undivided shares in the land and lease their individual dwellings to one another. There is no statutory body corporate or unit title disclosure regime. Shared costs and restrictions are governed by the leases. Problems commonly arise when alterations are made without being recorded on the flats plan.
Leasehold property is different again. The land is owned by someone else and leased to you, usually with periodic ground rent reviews.
It is also worth noting that not every apartment complex is a unit title. Some buildings are held under cross leases, company shares or freehold titles with a residents’ society attached. Your conveyancing lawyer should confirm the type of title before you make an offer.
Read the records together
Most unit title purchases proceed without difficulty. Where problems do arise, they tend to fall into a small number of categories, and each is usually visible in the documents if you know where to look. The three below are the issues that most often concern buyers.
Your regular body corporate levy covers the running costs of the building and contributions to the body corporate funds. A special levy is different. It is an additional charge raised when the body corporate needs money it does not have, most commonly for major repairs, remediation or an unexpected insurance excess.
Special levies can be substantial. A buyer who settles before a large levy is raised may face costs for work discussed before their purchase. Your lawyer should check the levy resolutions, payment dates and the sale agreement to establish how the cost will be allocated.
The warning signs are usually there. Look for:
Reading these documents together allows you to judge whether the current levy is realistic, or whether a significant call on owners is likely. It is far better to know this before signing than after settlement.
Auckland has a well documented history of apartment and townhouse developments affected by weathertightness failure, commonly described as leaky buildings. Many affected buildings were constructed during the 1990s and early 2000s. Remediation can involve recladding an entire building, and the cost is shared among the owners.
Under the current disclosure regime, the pre contract disclosure statement must include information about weathertightness issues known to the body corporate. This applies whether or not the issues have been remediated and whether or not any legal proceedings have been brought.
Disclosure is a starting point rather than a guarantee. For buildings from the affected era, we recommend that buyers also review the minutes for references to leaks, moisture readings or cladding, obtain a building inspection from a suitably qualified inspector, and check the council property file and LIM for relevant records.
A building that has been properly remediated can be a sound purchase. The key is knowing which category the building falls into, what work has been done and whether further work is planned.
The quality of the body corporate has a direct effect on your costs and your enjoyment of the property. A well run body corporate makes timely decisions, keeps its records in order and saves steadily for future work. A poorly run one tends to defer decisions until problems become expensive.
The minutes and financial statements usually show which kind you are joining. We recommend looking for:
A body corporate with some of these features is not necessarily one to avoid, but you should understand what you are joining.
Disclosure and maintenance planning
The Unit Titles (Strengthening Body Corporate Governance and Other Matters) Amendment Act 2022 made the most significant changes to unit title law since the Unit Titles Act 2010 came into force. The changes were introduced in stages, with the new disclosure regime taking effect on 9 May 2023 and the final phase, relating to long term maintenance planning, taking effect on 9 May 2024. A number of guides still in circulation predate these changes, so it is worth understanding what is now required.
Before the reforms, the pre contract disclosure statement gave buyers a relatively limited snapshot of the body corporate. It is now considerably more detailed.
A pre contract disclosure statement must now include or be accompanied by, among other things:
The previous prescribed form has been repealed, and the former additional disclosure statement, which a buyer could request, no longer exists.
The result is a far more useful bundle of information. It is also a much larger one, and the time to read it is before you sign. This is where careful legal review is most valuable.
The reforms introduced a distinction between large and small developments. A large development is one with ten or more principal units, which includes many Auckland apartment buildings and larger townhouse complexes.
Large developments must:
Smaller developments of nine units or fewer may continue with a plan covering at least ten years.
For buyers, the long term maintenance plan is one of the most valuable documents in the disclosure bundle. It shows what the building will need over the coming decades, what that work is expected to cost and how the body corporate intends to pay for it. A plan that is realistic and properly funded is a good sign. A plan that defers major work without funding is a warning.
Under the previous law, the consequences of a seller failing to provide a proper pre contract disclosure statement were uncertain. The reforms resolved that uncertainty.
A buyer may now delay settlement or cancel the agreement if the pre contract disclosure statement is late, incomplete, inaccurate or not provided at all. Similar rights apply where the pre settlement disclosure statement is not properly given.
These rights involve specific notices and time limits. Cancellation generally requires notice to the seller and an opportunity to correct the disclosure. The process for delaying settlement differs. Your lawyer should check the applicable requirements before you act, as an incorrect notice or premature cancellation may put you in breach of the agreement.
For sellers, the lesson is equally important. Incomplete disclosure is no longer a technicality. It can delay a settlement or bring the sale to an end.
If you believe disclosure in your transaction is deficient, whether you are buying or selling, we recommend seeking legal advice before taking any step.
Further information is available from Unit Titles Services.
From agreement to settlement
Buying a unit title follows the same broad stages as any property purchase in New Zealand. At each stage, however, there are additional matters to address. The outline below follows the order in which they usually arise.
01
The most important point in any unit title purchase comes before you sign anything. Once the Agreement for Sale and Purchase has been signed by both parties, a legally binding contract is formed, with all the obligations that follow.
The seller must give you the pre contract disclosure statement before you enter into the agreement. We recommend that you:
It is important to remember that the real estate agent acts for and is paid by the seller. Agents do have responsibilities to buyers, but their role is to carry out the seller’s instructions. Independent advice should come from your own lawyer.
02
Once the agreement is signed, the clock starts on any conditions. The due diligence period is your opportunity to investigate the property and the body corporate properly, and it is usually short.
During this period your lawyer will search the title and unit plan and review the disclosure documents in detail. In a unit title purchase, this typically involves:
You should also obtain a building inspection report from a suitably qualified inspector, a LIM report from Auckland Council and, where relevant, confirmation from your lender that it will lend on the building.
If the investigations are satisfactory, your lawyer confirms the agreement as unconditional. If they are not, the agreement can be brought to an end in accordance with its terms.
03
Once the agreement is unconditional, preparation for settlement begins. Your lawyer prepares the transfer through Landonline, the electronic registration system operated by LINZ, and you sign an Authority and Instruction form allowing the documents to be registered on your behalf.
If you are borrowing, your lender sends mortgage instructions to your lawyer, who prepares the loan documents for you to sign and arranges for the funds to be drawn down on settlement day. If you are using a KiwiSaver first home withdrawal, apply early. The application includes a statutory declaration and must be approved before funds are released.
The seller must provide a pre settlement disclosure statement no later than five working days before settlement. It is accompanied by the required body corporate certificate and confirms the levies payable and any amounts owing. Your lawyer checks it against the earlier disclosure and against the settlement statement, which apportions levies and rates between seller and buyer.
The building is insured by the body corporate, but you will need your own contents cover from settlement, and you should confirm whether any improvements you own within the unit require separate insurance.
04
Before settlement you are entitled to carry out a pre settlement inspection to confirm the unit is in the same condition as when the agreement was signed. In an apartment, this should include any accessory units and confirmation that you will receive the keys, access cards, fobs and remote controls needed for the building.
On settlement day your lawyer receives the loan advance from your lender and your own contribution, and pays the settlement funds to the seller’s lawyer. In exchange, the transfer is registered with LINZ and title passes to you. Any levies owed by the seller are dealt with as part of settlement.
After settlement, your lawyer notifies the body corporate of the change of ownership so that levy notices, meeting notices and correspondence are sent to you. From that day you are a member of the body corporate, entitled to vote at its meetings provided your levies are kept up to date.
You will then receive a settlement report confirming the transaction, together with a copy of your updated record of title.
Prepare your disclosure early
Sellers of unit title property carry disclosure obligations that sellers of freehold property do not. Meeting them properly, and on time, is the surest way to keep a sale on track.
The pre contract disclosure statement must be given to a prospective buyer before they sign the agreement. In practice, that means it should be ready before your property goes on the market.
Much of the information required for disclosure is held by the body corporate or its manager. Gathering three years of minutes, financial statements, the long term maintenance plan and information about known defects can take time, particularly in small developments without a professional manager. Your lawyer can help identify who must prepare, sign or certify the required documents.
We recommend that you:
Errors in pre contract disclosure can now give buyers the right to delay settlement or cancel the agreement. A small investment of time at the outset can avoid a much larger problem later.
Once the agreement is unconditional, you must provide the buyer with a pre settlement disclosure statement no later than five working days before settlement. This statement is accompanied by the required body corporate certificate and confirms matters such as the levies payable for the unit, the period they cover, any amounts unpaid and any changes to the operational rules since the pre contract disclosure statement was given.
Your lawyer will then prepare the settlement statement. Body corporate levies, like council rates, are usually apportioned between seller and buyer as at the settlement date, so that each pays for their own period of ownership. Any arrears owing by you will need to be cleared on settlement.
It is also worth knowing that money paid into body corporate funds stays with the body corporate when you sell. Contributions you have made to the long term maintenance fund, for example, are not refunded to you.
Late or inaccurate pre settlement disclosure can entitle the buyer to delay settlement. Early preparation, and a careful check of the certified statement before it is sent, will help ensure your settlement proceeds on the agreed date.
Your people at Quay Law
Quay Law is a small, focused law firm situated in the residential area of Remuera. We act for buyers and sellers of apartments, townhouses and other unit title properties throughout Auckland, from the North Shore and Whangaparāoa to Pukekohe, and for clients throughout New Zealand, as part of a wider property and conveyancing practice.
When you instruct Quay Law on a unit title purchase, we do not simply process the transaction. We read the documents that matter and tell you plainly what we have found.
Our review covers:
We then take you through our findings, highlighting anything that may affect your costs, your use of the property or its future value. Where something requires further enquiry, we raise it with the seller’s lawyer or the body corporate before your conditions expire.
For sellers, we prepare and check disclosure, liaise with the body corporate and manage the transaction through to settlement.
Your matter is handled by Ian Mellett, Barrister and Solicitor and principal of Quay Law. Ian has more than 30 years of experience in law, including 25 years in practice in New Zealand and, before that, in South Africa. He has written on the conveyancing process for publications including NZ Home Owners magazine.
Ian is supported by Michael Mellett, Law Clerk, who is often your first point of contact. Michael assists with gathering body corporate documents, coordinating with real estate agents, lenders and body corporate managers, and keeping you informed of progress. All legal advice on your matter is given by Ian.
You deal directly with the people working on your file throughout, from your first enquiry to your settlement report.
A guide to where fees start
You should know the cost of your conveyancing before you commit to it.
Typical purchase
$1,800
Starting guide, plus GST and LINZ disbursements.
Typical sale
$1,650
Starting guide, plus GST and LINZ disbursements.
Transactions involving unit titles can carry an additional cost, because there is more to check. This includes the unit title disclosure requirements, the AGM and committee minutes and the various matters that flow from them. If we identify issues that require significant additional work, such as negotiation over a special levy or a defect, we will let you know that the work is additional to the typical fee.
These figures are a guide to where fees start, and the final fee depends on the circumstances of your transaction. The best way to obtain a closer quote is to complete our enquiry form, and we will call you back to discuss your transaction.
Any prices, inclusions, exclusions and additional work described on this website are a guide only and will be handled on a case by case basis. Our terms and conditions apply to every engagement, and the team will send you a copy of our terms and conditions when you instruct us.
Any prices, inclusions, exclusions and additional work are a guide only. We assess each transaction individually. Quay Law’s terms and conditions apply to every engagement. The team will send you a copy when you instruct us.
Your unit title questions
There is no legal requirement to have a lawyer review it, but we strongly recommend it. The statement and its accompanying documents are lengthy and technical, and the most important information is often found in the detail of the meeting minutes and the long term maintenance plan. A review before you sign, or within your due diligence period, allows problems to be identified while you still have options.
A levy is your share of the body corporate’s running costs and contributions to its funds, generally based on your unit’s utility interest. Levies can increase if costs rise or major work is planned. The minutes, budget and long term maintenance plan help you understand what future levies may cover.
A special levy is an additional charge raised when the body corporate needs funds beyond its regular budget, often for major repairs or remediation. Buyers should check when the levy was or will be raised, when it is payable, and how the sale agreement allocates the cost between buyer and seller.
The pre contract disclosure statement must include weathertightness issues known to the body corporate. We also recommend reviewing the meeting minutes, the council property file and LIM, and obtaining a building inspection from a suitably qualified inspector, particularly for buildings constructed during the 1990s and early 2000s.
In certain circumstances, yes. Buyers may have rights to delay settlement or cancel if pre contract or pre settlement disclosure is not properly given. The notice requirements and time limits differ. Cancellation generally requires giving the seller an opportunity to correct the disclosure. Take legal advice before acting.
It may be. Many Auckland townhouse and terraced house developments are unit titles, but others are freehold, cross lease, or freehold with a residents’ society. The record of title confirms the position, and your lawyer should check it before you make an offer.
Settlement dates are agreed between buyer and seller, so the overall timeframe varies. What matters most is allowing enough time in the due diligence period to obtain and properly review the body corporate documents. We recommend discussing your timeframe with us before you sign.
Yes. Off the plan purchases carry their own risks, including sunset clauses, changes to plans and specifications, and the absence of an established body corporate history. Separate disclosure requirements apply. We recommend having the agreement reviewed before you sign, as these contracts are usually drafted by the developer’s lawyers.
Find the guidance you need
A clear guide to buying an apartment or townhouse on a unit title in Auckland, from the disclosure statement through to settlement, from Quay Law.
A guide for Auckland sellers of apartments and townhouses on unit titles, covering disclosure obligations, timing and settlement, from Quay Law.
What a body corporate is, what it must do, how committees and managers work, and your rights and obligations as a unit title owner in New Zealand.
A plain English guide to unit titles in New Zealand: principal and accessory units, common property, the unit plan and the body corporate.
How building condition affects every unit title owner, what disclosure does and does not tell you, and which reports to obtain before you buy.
A plain comparison of freehold, unit title, cross lease and leasehold property in New Zealand, and why the title type matters before you make an offer.
Speak with us before you sign
Whilst every unit title transaction follows the same broad process, each building has its own history, finances and character. The skill lies in knowing where to look and what the documents are really telling you, and you need to have confidence in the people representing you.
If you are buying or selling a unit title property in Auckland, we recommend speaking with us before you sign an agreement. Contact Ian Mellett at Quay Law, Barrister and Solicitor, by completing our enquiry form below, or call us on 09 523 2408.
Quay Law, Barrister and Solicitor
The information on this page is provided for general information purposes only and is not legal advice. Every transaction is different, and all matters should be discussed with the team at Quay Law.