New body corporate laws one step closer



New body corporate laws are another step closer with the Finance and Expenditure Select Committee having now heard submissions on the Unit Titles (Strengthening Body Corporate Governance and Other Matters) Amendment Bill. The main changes within the proposed legislation are:

  • Amendments to improve the disclosure regime to prospective buyers of units
  • Strengthening body corporate governance
  • Increased professionalism and standards of body corporate managers
  • Ensuring that planning and funding of long term maintenance projects are adequate and proportionate to the size of the complex concerned

Those making submissions included representatives from councils, the Law Society, the insurance industry and body corporate managers. There was much commonality in concerns that were raised. At a glance, key submissions included:

Long term maintenance plans

  • There may be difficulty setting a budget for a long term maintenance plan over the new extended period (for medium and large body corporate developments) of 30 years. However it was noted as important that those buying into a body corporate complex fully understand the repair and maintenance liability and funding they inherit.
  • Mandatory seismic strengthening should be separated from repair and maintenance and capital improvements covered under the long term maintenance plan.


  • Prospective buyers need to be able to have greater access to key information, particularly concerning weathertightness and earthquake prone building issues. However, the recommendation to include three years’ meeting agendas and minutes with all supporting papers of all annual general meetings and committees is seen as excessive and administratively burdensome.
  • The additional regulation may also increase compliance costs that may disincentivise unit title ownership.

Liability of body corporate chairpersons and managers

  • There was some discussion as to whether body corporate managers and chairpersons should be made to hold fiduciary duties and whether chairpersons should be liable for acts or omissions that lead to loss. This also raised the question whether New Zealand should legislate for a defence of good faith, as exists in certain Australian legislation.
  • The publication of a register of body corporate managers was proposed to enhance transparency.

Insurance issues with cross-leases

  • Although cross-lease ownership is not covered by the legislation, submitters raised issues occurring where co-joined units owned under a cross-lease structure are insured under different policies through different insurers. It was suggested that there by a legislative requirement that such units (within the same co-joined property) have a common insurer.

Power balance

  • There was discussion on the issue of how the balance of power can be skewed in favour of a small minority in the body corporate and the suggestion that, if a committee makes a decision that adversely affects the minority, it should be clear that minority relief is available under the Act.

Delegation of powers

  • There was a request for more clarity around what powers can be delegated by the body corporate to its committee and whether a committee can decide on a matter that requires a special resolution.

What’s next?

The Finance and Expenditure Committee’s report to the House is due by 10 September 2021. There is no indication yet as to whether all of any of the submissions will result in any changes to the legislation as currently drafted. However, given the wide spread consensus that urgent changes to the current legislation are required, hopefully the legislation will be progressed without much further delay.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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