Changing rules – what does it mean to me?

By 1 October 2012 new body corporate operational rules are required under the Unit Titles Act 2010. Most bodies corporate have started to prepare replacement rules.

There are a number of things which are now covered elsewhere, not in the rules. These include AGMs, elections, voting, insurance and maintenance responsibilities. The new rules will focus on “operational” matters – the control, management, administration, use or enjoyment of the units and common property.

There are only six default rules about:

  • Damaging or defacing common property
  • Leaving rubbish and recycling on the common property
  • Noise
  • Parking
  • Interfering with the reasonable use or enjoyment of the common property
  • Disposing of rubbish

If there are more than a few units, the default rules will probably not be enough. The Auckland District Law Society has draft pro-forma rules for a residential body corporate, commercial/industrial body corporate and a mixed-use body corporate. These pro-forma rules can be amended to suit. This can be a cost effective way of approaching replacement rules.

Some bodies corporate may require bespoke rules. They may have issues peculiar to them. They may need to deal with issues that are covered by the existing rules as they have been dealt with historically. This might be an appropriate approach e.g. for a managed property like a hotel.

Some bodies corporate may have to consider whether existing rules are appropriate (and legal) to carry forward. Can a restriction on use of the units be maintained? How should management contracts be dealt with? Can levies be apportioned differently? This is important stuff and goes to the ongoing costs for a unit and, ultimately, the value of it.

Unit owners must consult with their mortgagee before voting, if their mortgage requires it. Most recent mortgages require an owner to notify the mortgagee if a rule change is proposed. Older mortgages may not. Non-compliance means a breach of the Act, and more importantly, a breach of your mortgage.

If you want a say, consider getting involved in the rule change process. At a minimum, vote. If a rule is created that members are not happy with, changing it will take time and effort later.

,

Comments are closed.

.