In the last decade we have witnessed a significant growth in apartment living in Wellington City. This has been driven by public demand and by the need for more intensified development of available inner-city land. Apartment dwellers enjoy being in close proximity to their work place as well as having Wellington’s social and entertainment scene on their doorstep. Purchase costs and getting value for money is also a significant factor in increasing the demand for apartment living.
For a large percentage of home buyers, their foray into apartment living is likely to be their first experience of being part of a body corporate structure and unit title ownership. This is of course a widely accepted form of property ownership but does have special considerations that don’t come into play with a standard ‘fee simple’ structure common to most stand-alone residential homes. In simple terms, a body corporate may be described as a legal entity embracing all of the unit owners and gives them or their representative a say either directly, or through the body corporate’s elected committee, in the running and maintenance of the complex.
Purchasing an apartment
Purchasers of an apartment that is administered by a body corporate structure are provided with a lot of information prior to making a final buying decision. By undertaking a methodical due diligence approach to your purchase coupled with appropriate legal guidance you will, as a potential buyer, have a good insight into how the body corporate structure is being administered before committing to purchase.
The introduction of the Unit Titles Act, 2010 brought with it a number of significant changes. None more so than the need for owners who are selling a unit titled property to supply the purchaser with a whole raft of information about the body corporate structure and most importantly, any ongoing liability in regard to body corporate fees and other associated costs. The information provided by the apartment seller comes in the form of a series of disclosures (usually two disclosures, but there can be three if further information is deemed to be necessary). The first, and probably most important, disclosure covers the following:-
• The amount of the annual body corporate levies.
• The period covered by the levies.
• Proposed levies for the next 12 months.
• Proposed maintenance for the following 12 months and how this is to be funded.
• Balance of all body corporate bank accounts as at the date of the last financial statements.
• A general explanation of various terms relating to unit title ownership.
• Details of any weather-tightness issues relating to the subject property.
An apartment buyer can, at their expense, request additional information if required and then there is a pre-settlement disclosure which ensures that all pertinent items that may impact on a buying decision have been disclosed. These latter two disclosures will likely provide the following information:-
• Insurance details.
• Amounts due to and by the body corporate.
• The text of motions voted on at the last AGM and whether passed or not.
• A summary of the long term maintenance plans and associated funding arrangements.
• Any changes to the body corporate rules.
• Whether any proceedings are pending against the body corporate.
These disclosures cover a wide spectrum view of how the body corporate is being administered and importantly, what future commitments, if any, have been made for maintenance etc. Perusal of recent body corporate minutes of meetings is also advised. While this may seem an overload of information with a degree of duplication, being in possession of all available information with regard to the body corporate enables buyers to proceed with confidence.
Tommy’s Real Estate is heavily involved in Wellington’s apartment scene. If you have an interest in this popular lifestyle or require further information regarding apartment living, we invite you to give us a call at 04 381 8600.