Finding out about a unit title property


Q: We are interested in buying a unit in a complex built in the 1990s. A friend says it looks like a leaky building waiting to happen, but the vendor says it’s fine. What can we do to find out more?

A: As many homeowners have found out to their cost, you can’t always tell if a property has problems just by looking at it. Leaky buildings have been described as New Zealand’s silent epidemic. The majority of these properties were built in the late 1980s to early 2000s, using materials or methods that were not up to the task.  Thousands of people across the country have been affected by the discovery that their biggest financial asset is rotting around them. Some experts suggest that there are more cases to come, as leaky building issues gradually reveal themselves over time. Owners in many large complexes have been hit by huge remediation costs and hassles.

The paramount task in your situation is to ensure you are fully aware of what you may be getting yourself in for. That means doing as much research as you can into the particular unit you are interested in and the property as a whole. 
In the first instance, I recommend talking to the licensed real estate agent working for the vendor. They are legally required to tell you if they know or suspect that there are any issues with the property for sale.
This kind of property ownership is known as a unit title. It allows individual ownership of parts of a single building, or of separate buildings within one complex. Each unit title is made up of three parts: ownership of your particular apartment or unit and any ‘accessory’ units, like garages, private courtyards and storage areas; an undivided share of the ownership of the common property (lifts, laundries, lobby areas, gardens) and an undivided share of the ownership of the units if the unit plan is cancelled.
When you’re considering buying into a complex where there are multiple owners, there are some important additions to the usual due diligence to-do list. A title search will help you find out all the facts about the property’s ownership, boundary and access, as held by Land Information New Zealand (LINZ). Remember to look out for easements or covenants that may differ from your understanding of the property, such as rules about who can live in it, car parking and access. 

A Land Information Memorandum (LIM) will also show you information held by the local council about the property and land. Get an independent assessment of the property, and the complex as a whole, from an inspector who has professional indemnity insurance and carries out their work in accordance with the New Zealand Property Inspection Standard. They will be best placed to assess the current and future likelihood of any problems with the property. 

As a prospective buyer, you are entitled to three sets of information from the seller. These are:
  1. A pre-contract disclosure statement, which the seller provides before entering into an agreement for sale and purchase;
  2. A pre-settlement disclosure statement, which the seller provides after entering the agreement for sale and purchase but before settlement of the sale;
  3. An additional disclosure statement, in which the buyer may request some or all of the information the seller is required to provide.
These statements help prospective buyers learn more about the property and the rights and responsibilities they will be signing up for if they purchase it. However, they do not always provide the full picture. 

Becoming a unit title holder means you automatically become a member of the complex’s body corporate, which consists of all the unit owners acting as a group. A body corporate has a number of responsibilities relating to keeping the property in good order, organising and maintaining insurance, and making sure owners keep to the rules as set under the Unit Titles Act 2010, such as complying with all laws and particular requirements around noise and pet ownership, for example, and keeping their individual property in good order. Each unit title holder pays a set annual amount into a fund that looks after insurance, maintenance and other costs. You should be provided with a copy of the complex’s body corporate rules in the pre-contract disclosure pack.  Read these carefully, as they can limit what you may or may not do with the unit you are interested in.
Each body corporate has an elected chair (who must own a property in the complex). A body corporate also must have a Long Term Maintenance Fund (LTMF) and a plan for dealing with any issues that will affect all the members, such as large-scale remedial works e.g. upgrade lifts or insurance rate rises.  

At the Real Estate Agents Authority (REAA), we recommend asking for a further set of information about the body corporate to understand the financial position of the complex as a whole. Ask the vendor (or the selling agent) for a copy of the minutes for all body corporate general and extraordinary meetings for the last three years, plus financial statements and audit reports for the same period. Find out if there are any unpaid body corporate fees attached to the property you are looking to buy. It’s also worth chatting to other unit owners within the complex to see how the body corporate operates.

Request to see the current Long Term Maintenance Plan (LTMP) and examine it carefully. These plans must be prepared for a mandatory minimum of 10 years and be reviewed every two years – it pays to be cautious if the current LTMP is near the end of its term, especially if the complex is in a poor state of repair. You’ll want to ensure the LTMF contains  the funds required to finance the ongoing expected repairs and maintenance detailed in the LTMP.

As with any property transaction, legal advice will be invaluable to help you weigh up the pros and cons of the decision. It’s a good idea to engage a lawyer at the start of the process. If you don’t have a lawyer, the New Zealand Law Society can help you find one at There are no silly questions when you’re considering a decision that will have a big impact on your emotional, physical and financial wellbeing. It’s far better to do your homework in meticulous detail than spend a lot of time and money on an expensive mistake.