What is material?

Historically anyone making changes to a unit title development needed either to complete a redevelopment plan or to cancel the unit title plan and start again. Both options needed unanimous consent from all of the owners.

Things are different under the Unit Titles Act 2010 but there are still steps to be satisfied. Some of them are causing practical difficulties.

Simple boundary adjustments

Adjusting a boundary between units can now be done using a process set out in the Unit Titles Act 2010.

The method can be used if the “redevelopment consists solely of the adjustment of the boundary between 1 or more units shown on a unit plan”. A change in the location of the boundary between say unit A and unit B would be covered. It probably also covers a unit changing its boundary with the common property (i.e. the boundary “between 1” unit).

There is no need to obtain the consent of all of the registered proprietors to do a simple boundary adjustment. The owners of the units that will have their boundaries adjusted jointly make an application to LINZ for changes to the unit plan. The other owners are not required to sign. However, the process can only be used where:

  • the adjustment does not “materially affect” the common property; and
  • the adjustment does not “materially affect” the use, enjoyment or ownership interest of the units that aren’t having their boundaries changed.

A certificate will need to be provided by the body corporate confirming that this is the case. The chairperson of the body corporate will sign off the certificate and they will have to make a judgment about what amounts to ‘material”. There is no stated criteria. You can expect the chairperson to take extreme care.

A certificate is also required from a registered valuer as to the ownership interest of the units. The valuer must also state that the amendment to the unit plan does not affect the ownership interest of any unit that is not having its boundary adjusted. You can expect a valuer to use extreme care in giving any such certificate.

These additional steps mean that a simple boundary adjustment may not be quite so simple.

Redevelopment

All other changes to a unit plan are redevelopments and require a similar but more robust process to be followed. The body corporate (rather than just the affected owners) applies for the deposit of the new plan. Before doing so the body corporate must:

  • ensure that all of the owners of the units that are materially affected by the redevelopment have consented in writing to the new unit plan; and
  • pass a special resolution agreeing to the new unit plan.

The redevelopment will involve the inclusion of part of the common property and as a result a review, of the ownership interests.

Objection process

There is an objection process which can be used when a special resolution is passed to complete a redevelopment. Notice of the resolution must be given to every unit owner and all of the parties who have an interest over a unit. They each have the right to make an objection to the designated resolution. Once an objection is made the matter will be sent to the High Court for determination.

The Unit Titles Act 2010 does recognise the role of the tenancy tribunal in resolving disputes. However the tribunal does not have jurisdiction in relation to disputes relating to the title of land. A redevelopment or cancellation of a unit plan is a dispute relating to the title of land.

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