Do you live in an apartment or unit and pay body corporate fees? Who do you think should be paying for repairs and maintenance?
Under the Unit Titles Act 2010, a body corporate is required to repair and maintain common property and all building elements and infrastructure that relate to or serve more than one unit.
Building elements are those things that are necessary to the structural integrity of the building, the exterior aesthetics, or the health and safety of persons who occupy or use the building, for example rooves, balconies, decks, and the exterior cladding.
Infrastructure includes such things as pipes, drainage, wires, electricity, internet, and other services or utilities to or from a unit or the common property.
Each unit owner is required to repair and maintain his or her own unit.
Repairs and maintenance can vary from relatively minor works such as fixing a leaky pipe or a broken gutter to major remedial projects like a complete re-clad of a multi-storey building. Major projects are likely to require expert advice from architects, engineers, and project managers and may require the body corporate to obtain resource and building consent. These major projects may take several months or years to complete and at a cost to all owners in the millions of dollars.
The issue arises as to who pays for this work.
In the first instance, a body corporate is required to levy all owners in accordance with their utility interest. Utility interests are used to calculate the proportion of levies payable by a unit to ensure a fair allocation of costs between owners.
At the conclusion of repair or maintenance work, the body corporate may reapportion the costs to individual owners if the repairs to or maintenance of building elements and infrastructure are contained within those owners’ units, or to owners who substantially benefit from the work.
Initially, it may appear obvious that some units will benefit substantially more than others from repair and maintenance work – for example, consider a roof that is leaking into the penthouses below and needs to be replaced: if I own a ground floor unit why should I pay? However, the courts are increasingly taking the view that anything necessary to the structural integrity or external aesthetics of the building or the health and safety of occupiers and users of the building benefits all owners.
This is an evolving area of law, and the circumstances in which a body corporate can reapportion costs to only some units is narrowing.
Decisions will turn on the particular circumstances. If a body corporate is considering reapportioning the repair and maintenance costs, it should seek legal advice. Disputes between owners and a body corporate about the reallocation of costs can be costly and time-consuming.
If this article has raised any questions for you, we'd love to hear from you. Please contact Dahl Calder, Partner, at firstname.lastname@example.org or 04 916 7473.
Disclaimer: The information contained here is of a general nature and should be used as a guide only. Any reference to law is to New Zealand law and legislation. We recommend before acting on it, you consult your accountant or tax adviser