Let’s face it – body corporate affairs can be complicated. To help answer your questions about how your Body Corporate operates and how it will be managed by Strata Title Administration, we’ve put together answers to common queries, and information on important topics.
If you can’t find what you’re looking for, please let us know and we’ll be happy to help.
Managing your Body Corporate
If you own property under a unit title, then you’re automatically part of a body corporate. Usually set up by the developer who originally built the complex, it’s a legal entity of its own and makes you and your fellow property owners jointly responsible for things such as paying levies and caring for common property.
Keeping a body corporate running smoothly and ensuring all owners have a voice is a complex and demanding process, so it’s common to get help from a professional body corporate management company like Strata Title Administration. By appointing us, you can relax knowing your finances will be looked after, that an independent third party will be available to assist in addressing disputes and that you’ll be meeting your obligations under the Unit Titles Act 2010 and Regulations 2011.
The financial accounts for your Body Corporate are a record of all receipts (levies received from owners) and payments made to run your Body Corporate. The money is held in an audited trust account, and invoices to support the transactions to and from the account are held by Strata in your Body Corporate’s account file.
A statement of the receipts and payments made during the Body Corporate’s financial year is given to you with the agenda for the Annual General Meeting. Also attached to the statement will be an audit certificate, which shows that an independent chartered accountant has audited the account – a process that happens every two months.
Strata will make sure your Body Corporate complies with the requirements of the Goods and Services Tax (GST) Act and keep all the records required by the Inland Revenue Department.
The GST Act requires your Body Corporate to file GST returns every six months if the funds passing through your trust account are between $60,000 and $499,999 annually, and every two months if the amount is $500,000 or more in a year.
A body corporate that is registered for GST also needs to file an annual income tax return, and pay tax if it has any taxable income (such as interest). Strata will arrange for a chartered accountant to file income tax returns for your Body Corporate.
Under the Unit Titles Act 2010, the annual accounts for a body corporate must be audited independently or submitted to an accountant for review, unless the body corporate resolves by special resolution not to do so for a particular year.
Auditing can be expensive. In fact, it’s often financially unrealistic for a body corporate to employ an independent auditor unless it has substantial cash reserves. To help you save money while keeping your account secure, Strata offers a more economical alternative to an independent audit of the accounts.
At each Annual General Meeting, proprietors will be asked to consider this special resolution:
“That section 132(2) of the Act does not apply to the body corporate for the forthcoming year but that all transactions of the body corporate are to continue to be made through the trust account of the body corporate manager which is subject to audit, and that any interest earned be applied towards the cost of auditing the trust account, which is audited every two months.”
By passing this resolution, the body corporate avoids the cost of employing its own independent auditor. Strata’s trust account is audited every two months and we will send each owner an up-to-date audit certificate with the body corporate’s annual accounts.
Your levy is your monetary contribution to the maintenance and management of the Body Corporate and its common areas. You need to pay a levy regardless of whether your Body Corporate uses a professional management company like Strata Title Administration.
At the Annual General Meeting the Body Corporate will set a budget to cover yearly costs such as insurance, building valuations, maintenance contracts, administration fees, etc. There will also typically be other outgoings such as contribution to an Optional Contingency Fund or a fund to cover long term maintenance.
Owners at either the Annual General Meeting or an Extraordinary General Meeting will discuss and agree upon the amount and when a body corporate’s levies are due and decide on a ‘user pays’ principle for debt collecting. Normally, a body corporate will resolve that if a levy is not paid on time, the property owner in question will need to pay a 10% surcharge, interest, debt-collecting costs, and any solicitor or client costs.
Levies are essential for a well-run and maintained body corporate. You and the other owners in your Body Corporate must comply with Section 80 of the Unit Titles Act 2010. This requires you to keep the common property in a state of good repair; establish and maintain adequate funds; and keep levy contributions from owners in proportion to the ownership Interest of their respective units. A levy invoice for your contribution to the funds of the Body Corporate will be sent to you with the minutes of the meeting.
To save you time and keep your money safe, Strata will follow these steps to manage your Body Corporate’s payments.
- We collect your levy
All owners in a body corporate must pay a levy to cover costs. The amount you pay is decided on collectively by your Body Corporate.
You need to pay a levy regardless of whether you use a professional body corporate management service. If you’re with Strata, we’ll make things easy by collecting and managing everyone’s levy.
- Strata is paid a fee
Strata charges a fee for managing the Body Corporate, which we’ll deduct from the overall amount we collect.
There are no hidden costs – the amount your Body Corporate pays will be the amount you’re quoted.
- Money is held in a trust account
Besides the fee paid to Strata, the rest of the money from collected levies is put into an audited trust account at ASB Bank.
Your invoices and expenses are paid
With authorisation from your Body Corporate, Strata will organise to pay invoices and expenses out of the trust account.
The majority of many large residential apartment complexes and townhouse developments have an onsite building manager. The role of the building manager varies depending on the type and complexity of the body corporate.
Each building manager is an independent contractor to the body corporate, with an employment contract administered by the body corporate via the chairperson, the committee and Strata.
An onsite building manager is required to maintain a register of residents in the building or complex, to coordinate residents moving in and out of the units (e.g. provide lift protection guards during the movement of bulky goods or furniture) and to promote a harmonious atmosphere in the building or complex.
The building manager provides a monthly written report on the operation of the building detailing visits by police or emergency services, lists problems with, or failures of, the building’s services, and records callouts of any service contractor (such as lift maintenance or air conditioning contractors). Depending on the size of the body corporate, the building manager may be responsible for cleaning common facilities.
Where a body corporate has an onsite building manager, that person is responsible for:
- Onsite liaison between residents
- Control of contractors working for the body corporate
- Supervising access by emergency services to any unit
The building manager will have a copy of the “as-built” plans of services to the building, and will report to the body corporate’s consulting engineer when carrying out Compliance Schedule inspections under the Building Act that don’t require the services of an independent qualified person. The building manager also ensures that everyone adheres to fire safety regulations and requirements of the Building Act.
The contract between a building manager and a body corporate usually requires the building manager to:
- Be an independent contractor
- Be a ‘legal person’ exempt from the provisions of the Employment Relations Act 2000
- Be registered for the purposes of the Goods and Services Tax Act 1985
- Pay the Accident Compensation Corporation premium
The building manager must meet the requirements of the Privacy Act 1993. This includes any personal information obtained about a property owner or resident. When the building manager’s contract expires, he or she must return all records and information to the body corporate.
Usually the amount paid to an onsite building manager includes the cost of renting the building manager’s premises. Often an investor owns the office, carpark and flat occupied by the building manager, and the body corporate is typically required to pay the building manager a sum covering the rent payable to the investor plus the ‘owner’s outgoings’ (body corporate levies and rates).
With Strata Title Administration, you can access all your important property information at any time by logging in to our secure online portal.
You can log in here to see everything from scheduled meetings to financial data. You can also recover your username or password if you’ve forgotten them. If you’re still having trouble logging in, please call us on 0800 7 STRATA or 09 307 3721.
Annual General Meeting
At least three weeks before the date of the Annual General Meeting of a body corporate, owners will receive a formal notice giving the time, date and venue for the meeting and asking owners to nominate people for the position of chairperson of the body corporate or to be committee members.
Owners will also be asked to nominate items of general business and proposed resolutions they would like the body corporate to consider at the Annual General Meeting.
Yes. At least two weeks before the Annual General Meeting, a body corporate will send the agenda to each owner, along with a proxy form, a postal voting form, the annual financial statements, an audit certificate, competitive insurance quotations, a proposed budget and any other relevant documents such as a building manager’s report or committee report.
Agenda items discussed at an Annual General Meeting include:
- The appointment of a chairperson of the body corporate, and a committee
- The body corporate’s financial statements
- The body corporate’s audit procedure
- The renewal of the body corporate’s insurance policy
- Maintenance issues
- A budget of projected expenditure for the next 12 months, on which the levies for the next year are based
The right of an owner to vote at a body corporate meeting, and the methods of voting, are set out in the Unit Titles Regulations 2011. An owner who has not paid any part of the body corporate levy, or other amounts due for their unit to the body corporate, is not allowed to vote.
Any vote at a meeting of the body corporate may be exercised by the owner in person, by postal vote, or by proxy. All proxy votes must be made in writing using the prescribed form. The majority of resolutions are passed by a simple majority of over 50% of eligible voters, although some decisions require a 75% majority to pass known as a special resolution. There are also special provisions which apply when a body corporate wishes to vote on a resolution that requires a unanimous decision.
The legislation sets out two means of voting. The first is that the owner of each principal unit has one vote. Alternatively, should any owner request the vote be on the basis of a “poll”, the vote is based on the Ownership Interest of the principal units and accessory units owned by each person. This means that an owner of a unit(s) that has a higher Ownership Interest, compared to all other units in the development, has a vote that carries more value.
Each meeting of a body corporate can pass valid resolutions only if it has a quorum, which is defined under the Unit Titles Act 2010 as being 25% of principal units. An owner who has not paid any part of the body corporate levy, or other amounts due for their unit to the body corporate, is not allowed to vote and does not form part of the calculation to determine the quorum.
A proxy form lets you vote without being present, by authorising other attendees to vote in your absence. If you can’t attend an Annual General Meeting, it’s important that you complete and return the proxy form so you’re represented.
Yes. A postal voting form will have details of the resolutions to be considered at the Annual General Meeting with an invitation to either record your vote for or against any motion or to abstain from voting on a particular motion. This lets you be represented on the issues being considered at the Annual General Meeting, without being present or appointing a proxy.
Several months before the Annual General Meeting, Strata will arrange for a registered valuer to prepare a reinstatement insurance valuation of all the units and common property in a body corporate. Strata Title Administration will then forward the valuation to an independent insurance broker to gain competitive quotes for the renewal of the body corporate’s principal insurance policy. The quotes will be presented at the Annual General Meeting and owners will decide which insurance quotation to accept.
All maintenance thought to be required by the body corporate during the next year will be discussed at the Annual General Meeting, so a realistic sum can be budgeted for the body corporate’s maintenance and optional Long-Term Maintenance and Contingency Funds.
Maintenance may include repainting the exterior of the units, replacing signs or re-concreting a driveway. If your body corporate is a multi-level building, the maintenance discussion may include the need to upgrade the building’s security or fire protection system. There is a requirement under the Unit Titles Act 2010 to have a Long-Term Maintenance Plan and a method of funding the plan.
The body corporate makes a decision about the next year’s budget, informed by Strata’s recommendations. After discussing the financial statements for the last financial year, and considering any maintenance issues, property owners will consider what needs to be included in the body corporate’s budget for the next 12 months.
Strata will provide all owners at the meeting with data showing the previous year’s budget, actual expenditure, and a proposed budget for the forthcoming year. Owners will discuss this and decide on a body corporate budget for its next year. The due date of levy payments to fund the budget will also be discussed and agreed on by the body corporate.
This provides an opportunity for owners to discuss any other issues of concern. Motions submitted to a general meeting must be written in the agenda so all owners know the subjects to be raised.
Yes. After the Annual General Meeting, Strata prepares the minutes and sends these to all owners, along with an invoice for the annual levy for their unit and any other documentation supporting the minutes.
The levy invoice is a bill to each owner for their share of the body corporate’s budget. Your levy must be paid by the due date so your Body Corporate can pay its creditors. A body corporate’s insurance premium, valuation fee, and administration costs are paid upon receipt of levies. Throughout the remainder of the body corporate’s year, invoices for items such as common area electricity, lawn mowing, water and wastewater charges are paid as they fall due.
A body corporate has a statutory responsibility to be insured in a specialised way, which places obligations on the insurer as well as the body corporate.
The principal insurance policy, as defined by Section 136(1) of the Unit Titles Act 2010, requires a body corporate to “Insure and keep insured all buildings and other improvements on the land to their full insurable value”.
- The insurer must reinstate the damage up to the sum insured, which is defined in the reinstatement insurance valuation upon which the insurance is based.
- All principal and accessory units, and all common property, must be insured by the body corporate, unless all principal and accessory units in the Unit Plan are standalone units in which case the body corporate may by special resolution resolve that the individual owners may insure their principal and accessory units. The body corporate remains responsible for insuring the common property.
- Once an insurer has taken on the risk of a principal insurance policy for a body corporate, it can’t go “off risk” unless it serves a notice on the body corporate (or its insurance broker and any mortgagee of which the insurer has notice) to the effect that the policy will lapse or be cancelled on the date specified in the notice. That date must be at least 30 days after the date the notice was served. Competitive insurance quotations are obtained by Strata via independent insurance brokers for consideration and acceptance by the body corporate. The insurance quotations are based on reinstatement insurance valuations obtained for the body corporate. Strata discloses that it may receive a fee from valuation companies and insurance brokers relating to placing the insurance.
A body corporate often decides to insure against liabilities over and above the reinstatement insurance policy required by the Unit Titles Act 2010.
The most common additional risks insured against are:
- Statutory Liability, which provides for fines and legal defence costs due to unintentional breaches of each of the Resource Management Act, the Building Act and the Health and Safety in Employment Act
- Public Liability, which protects the body corporate from any claim for loss sustained by a tradesman while working onsite, or injury to an owner or to a visitor as a result of some malfunction of common property, such as an accident in a lift or in the body corporate’s swimming pool or gymnasium
- Professional Indemnity, for the chairperson and committees administering the affairs of the body corporate
The Earthquake Commission (EQC) and the New Zealand Fire Service (NZFS) apportion their charges on the basis of their estimate of the reinstatement value, unless the body corporate provides a registered valuer’s assessment of the indemnity value.
So, not only does the annual reinstatement insurance valuation allow the body corporate to obtain the insurance cover required by the Unit Titles Act 2010, but it also lowers the cost of the levies paid to the EQC and NZFS.
Because insurance companies wish to define the limit of their risk under any policy, a registered valuer prepares an annual reinstatement insurance valuation for your body corporate. The body corporate’s insurer calculates the level of insurance premium in accordance with this valuation amount.
A body corporate must have sufficient insurance cover to reinstate all the buildings and other improvements to their full insurable value, should they be destroyed by fire, earthquake or other disasters. A valuer is used to assess what it would cost to demolish a damaged building, bulldoze out the remains, and to redesign and reinstate the body corporate (including architect’s fees, the cost and time delays in obtaining town planning and building consents, and the effect of inflation on building costs during the period of reconstruction).
Expert knowledge is needed to accurately determine replacement value, indemnity value, demolition costs and the impact of inflation. For this reason, a registered valuer is usually brought in to prepare a reinstatement insurance valuation for a body corporate on the assumption that it suffers a 100% loss by fire or earthquake on the last day of the insurance year.
Most insurers for bodies corporate provide cover up to a limit of $5,000 for landlord’s fittings, home appliances, curtains, drapes and fixed floor coverings in any residential unit that’s tenanted.
However, if the unit is occupied by the owner, the insurers expect these items will be covered under the owner’s domestic contents policy.
We recommend that every unit owner periodically makes an inventory of chattels, fixtures and fittings and takes photographs of them. The photos will be well worth the effort when it’s time to claim for a loss under your domestic contents policy and/or for reinstatement under the body corporate’s insurance policy.
Strata recommends you check your domestic contents insurance policy to make sure you’re adequately covered. To streamline the process in the event of a claim, you might choose to insure your domestic contents with the same insurer that covers your Body Corporate.
If you own a non-residential unit, please check whether you are adequately covered by insurance for damage to landlord’s fixtures and fittings. Any internal partitions erected in a unit after it’s purchased are unlikely to be covered by the body corporate’s insurance policy.
Although Strata obtains a reinstatement insurance valuation for the body corporate, the registered valuer will not consider internal fit-outs to the unit following the purchase of the title, unless there has been a specific request to the valuer from the body corporate to assess these values.
Residential: Most major insurance companies have, as part of their body corporate insurance policies, an automatic loss of rentals cover of up to $25,000 per residential unit, if the unit is tenanted. If you own a residential unit that is tenanted, please check to see if your Body Corporate’s insurance policy covers loss of rentals, and if that cover is adequate for you.
Non-Residential: In a non-residential body corporate where a number of units are tenanted (such as an industrial or retail complex), the body corporate should discuss whether it wants a loss of rentals extension on its body corporate insurance cover. Normally it’s a good idea for a non-residential body corporate to have loss of rentals cover, and a provision for up to $5000 for claim preparation fees. That means if the property is damaged and the businesses operating from the units need to relocate, the rental incomes are protected.
Your Body Corporate’s insurance policy will have been arranged via an independent insurance broker. When you notify us of an insurance claim, we will either direct you to the insurance broker or arrange for an insurance claim form to be sent to you. Alternatively, you can download a claim form our major broker Wallace Mclean Ltd.
If the claim is likely to be substantial (e.g. repairs in excess of $1,500), the insurer may appoint an assessor to determine the extent of damage. If your unit is damaged and no longer secure, please take whatever steps you think are appropriate to make the unit secure, and notify Strata so we can arrange for an insurance assessor to call as soon as possible.
Payment of the insurance excess by the body corporate or the owner making the claim depends on what the body corporate has decided at its Annual General Meeting. This is recorded in the minutes of the meeting, which will have been sent to you by Strata.
Governance, roles and responsibilities
Understanding the roles in a body corporate can be challenging. To help with this, we’ve created a free Chairperson and Committee Manual. Strata can also arrange a workshop to help groups that are having difficulty with the challenges of these roles.
Under the Unit Titles Act 2010, the chairperson has governance responsibility for your body corporate. These responsibilities are detailed by the Act, the body corporate Rules, and the will of the body corporate as expressed in its Annual General Meetings. Although it’s common to delegate many of the tasks of the chairperson to a professional body corporate management service, this does not affect the property rights of any unit owner.
If you elect a formal committee, then the committee has a mandate from the Unit Titles Act 2010 and the AGM at which it is elected. The committee will have delegated authority from the body corporate unless it is resolved by the body corporate not to do so.
All committee members need to be entrusted to ensure effective governance, despite the different perspectives they hold. Individuals are neither advocates nor delegates with sectional interests, but work for positive outcomes for all concerned. The committee must be committed to ethical conduct in all areas of its responsibilities and authority.
(1) Subject to subclauses (2) and (3), a chairperson has the following duties:
(a) to maintain the register of unit owners; and
(b) to prepare the agenda for each general meeting; and
(c) to chair each general meeting (unless it is agreed at the start of a general meeting that another person will chair that meeting); and
(d) to prepare minutes of each general meeting; and
(e) to record resolutions voted on and whether they were passed; and
(f) to keep financial accounts and records; and
(g) to submit,on behalf of the body corporate, the body corporate’s financial statements to an independent auditor under section 132(2) (a) of the Act;
(h) to receive reports from the body corporate committee and distribute them to unit owners; and
(i) to sign documents on behalf of the body corporate; and
(j) to prepare and issue notices of resolutions to be passed without a general meeting; and
(k) to notify unit owners of the result of any vote on a resolution to be passed without a general meeting; and
(l) to notify the body corporate committee of any delegation of a duty or power by the body corporate to the body corporate committee under section 108 of the Act; and
(m) any other duties relating to the administration of the body corporate that the body corporate has decided by ordinary resolution to confer on the chairperson.
(2) A chairperson has all of the duties specified in subclause(1) (a) to (m) except to the extent that the body corporate has delegated any of the duties to the body corporate committee under section 108(1) of the Act.
(3) The duties specified in subclause (1) are in addition to those conferred elsewhere by these regulations or by the Act.
Nearly all residential apartment complexes of any size, and many large townhouse developments, have an onsite building manager. The role of the building manager varies, depending on the type and complexity of the multi-unit development. The building manager is an independent contractor to the body corporate, with an employment contract that is administered by Strata on behalf of the body corporate and its elected officers (the committee and the chairperson).
As part of a Body Corporate, you and the other unit title owners will pay levies to keep the collective property running well. You need to pay levies whether you employ a professional body corporate service or not.
Your Body Corporate is legally required to keep the common property in a state of good repair, establish and maintain adequate funds, and keep levy contributions from owners in proportion to the Utility Interest or Ownership Interest, as the case may be, of their respective units.
You’ll pay an annual levy, and sometimes you might pay a ‘special levy’ for a particular project outside the annual budget, as agreed on by your Body Corporate.
At its Annual General Meeting, a body corporate will set a budget to cover its costs – such as insurance, valuation, maintenance contracts, administration fees, and other outgoings such as contributions to the Sinking Fund (for a future expense or to pay a long-term debt) or Long-Term Maintenance Fund.
Owners at the AGM (for the annual levies) and at an Extraordinary General Meeting (for a special levy) will decide when a body corporate’s levies are due, and decide on a ‘user pays’ principle for collecting the levy if it’s not paid by the due date. That means if you don’t pay on time, you’ll need to pay more.
A levy statement for your contribution to the funds of the Body Corporate is sent to you with the AGM minutes, by your preferred method of contact (post or email).
The financial accounts for your Body Corporate are a record of all receipts (levies received from owners) and payments made to run your Body Corporate.
Invoices to support the items appearing in the accounts are held by Strata on your Body Corporate’s account file. A financial report detailing all receipts and payments made during the Body Corporate’s financial year is distributed to owners with the agenda for the Annual General Meeting. Attached to the financial report will be an audit certificate for Strata Title Administration’s trust account – this confirms it has been independently audited.
Strata will ensure your Body Corporate complies with the requirements of the Goods and Services Tax (GST) Act and that it keeps the records required by the Inland Revenue Department.
The GST Act requires a GST return to be filed every six months if the funds passing through your Body Corporate’s trust account on an annual basis are between $60,000 and $499,999, and every two months if the amount is $500,000 or more.
A body corporate registered for GST is also required to make an annual return for income tax purposes, and to pay tax if it has any taxable income (such as from interest). Strata will arrange for a chartered accountant to file income tax returns for your Body Corporate.
The Unit Titles Act 2010 requires financial statements for a body corporate to be audited annually, unless the body corporate decides by special resolution at the Annual General Meeting that they are not to be audited for a particular year.