Gill South from the NZ herald ran an article on HighProfiles on 25th Aug as part of a weekly Q & A on Auckland apartments. Here are the clippings for those that missed it.
A purchaser recently asked just what they should look out for when buying a unit title. Here is a summary of relevant points.
What are you buying?
Fundamental as it may seem, it’s worth checking the unit plan to see that the unit you think you are buying is precisely the one that the contract refers to. You’ll be surprised at how often that is wrong. Have a look too at the car park, any storage areas and any access areas to make sure that precisely the right units are described.
• Is the unit is freehold or leasehold?
• What easements or restrictions impact on use of the unit? on use of the common property?
• Have the rules been properly created i.e. are they lawful?
• What is the unit entitlement that attaches to the principal and accessory units (this will be relevant to levies and other responsibilities)?
• Understand what happens if the unit plan is ever cancelled and what rights others have to change any aspect of the property or your use of it.
What obligations go with the purchase of this unit?
• Read the rules and be clear you can live with these rules.
• View the budget and understand your financial obligations .
• Are there significant expenses that are anticipated?
• View all minutes of the body corporate and fully understand the issues that arise.
• Understand your voting rights and the obligations that go with them.
Community environment
Influences on the environment include:
• Who manages the development and how well do they do it?
• Does the manager live onsite?
• Is there a sinking fund and is that adequately used?
• Is there a long term maintenance plan?
• Are other owners all paying their levies?
• How are decisions made that affect the development?
Legal compliance
• Have all code compliance certificates issued?
• Does the LIM record anything of concern?
• Is a current building warrant of fitness required? on display?
Answers to these questions should give you a good understanding of the property but I would always recommend getting legal advice before signing on the dotted line.
The legal title to an apartment can often be complex and will always involve a number of different documents. To understand the legal structure of the development, who owns what and who can do what, you’ll need to look at not just your certificate of title but the plans, the rules and the supplementary record sheet.
At AlexanderDorrington we have started to collate publically available information about the legal make up of apartment complexes and publish them on our website. http://www.alexanderdorrington.co.nz/apartments
It’s early days yet, but more information will be added regularly. Let us know if there is a complex you particularly want there.
Debra Dorrington
Having just arrived back from a week in Surfers Paradise with family it’s nice to be sitting in a stable seat (rather than one attached to a very flimsy looking roller-coaster being powered by Superman). However, it was impressive to see the level of highrise development happening on the Gold Coast. There were cranes and workers all over the place. The $850m Soul Surfers residential complex was at about level 55 (it’s destined to have another 22 levels). The Hilton Surfers Paradise has recently reached its top level and is due for completion later this year, and there was plenty of other stuff going on too.
It wasn’t really a week for thinking about legal issues. To be frank most of the legal stuff I dealt with last week was about not running around the pool and not throwing stuff off the balcony. There were plenty of those sorts of rules though and it struck me that there is a balance to be reached in a residential complex between useful rules that ensure people are respectful of each other and making sure absolutely nobody ever gets offended. My kids thought it a bit tough not being allowed to jump, dive, throw a ball, splash or wear suntan lotion in the pool.
So what rules are you bound by as a unit owner? Body corporate rules must be passed by a resolution of the owners. Some rules can be changed by majority, some need a unanimous decision. They are not effective until they have been registered at LINZ. The unit titles act doesn’t bind you to any other rules.
As an owner you are bound by rules that have been properly made, and so is anyone in occupation of the unit. So if you (or a majority of your co-owners) agreed that there should be no splashing in the pool, then those are the rules.
Don’t forget, it’s a blog, it’s not legal advice. See your lawyer for that.
This 32 Sqm Hong Kong apartment is equivalent to the size of an average studio apartment in Auckland City, by moving the walls along sliding tracks in the ceiling it is possible to change the single room into 24 different combinations!! Very creative.
As we are all aware, Auckland apartments can be very small, every central city apartment which I have lived in has had a shortage of storage space, and I for one, would love to see some creative use of existing spaces.
Here is a great example of a table which folds down from the wall and doubles as a picture frame when not in use. Visit Ivy Design for more details.
Recently I was asked whether a client could transfer a carpark they no longer needed. The carpark was an accessory unit in a unit title development, so the client owned the carpark and they owned an apartment, (which was a principal unit).
Unless there is something registered on the title preventing the transfer, an accessory unit can certainly be bought and sold. There’s a restriction though and it’s pretty significant.
An accesory unit can only be transferred to someone who also has a principal unit, so you can’t sell the carpark (or the broom cupboard) to someone who has no other interest in the apartment building. The LTO won’t issue a separate certificate of title for an accessory unit.
Sometimes car parks are created as principal units and that’s a different story. They can be transferred in the same way an apartment can be bought and sold.
We have just completed the building profiling for Citta Apartments 184 Symonds St bringing the total apartment profiles in Auckland city to 17,001!. You can view the floor-plans for Citta apartments and browse by floor area in Sqm, number of beds, light direction, and number of car-parks each apartment has. Citta apartments has a large shared garden courtyard on the 1st floor featuring a fountain and pergola, nice seating and landscaping.
Many of Citta apartments car-parks are dual car-parks which means you can park two cars in line, one in front of the other. Bedroom layouts are either studio or two bedroom, studios ranging in size from 28 Sqm to 43Sqm and Two bedrooms from 52 – 77Sqm.
Citta is well positioned on the corner of Kyber pass road and Symonds St being close enough to walk into the city or Newmarket 10-15 mins each way, also on the major bus route leading into the city. It is over endowed with good places to eat and drink nearby. This is a great option if you are a couple with two cars as you effectively get two for the price of one because of their size.
How about some insight into some of the legal issues that arise with apartments, apartment buying, selling and management. There is plenty to talk about, especially with the massive change in unit titles law that is on the horizon.
If you want any comments made on particular legal issues, just send in your questions.
I thought I’d start with some of the fundamental stuff, the language. Words like stratum estate, unit title, common property, body corporate, unit entitlement; what do they actually mean?
Although “unit title” is a commonly used description of ownership of an apartment it isn’t a phrase that’s used in the legislation. The legal description is a “stratum estate”. That is ownership of the unit, but it includes more than that. It includes shared ownership of the common property and recognition of the notion that if the legal set up for the unit development is ever cancelled, a right to co-own the property remains.
Unit entitlements are calculated based on the value of your unit compared to the other units. They are only assessed once, when the development is first done, and then remain the basis on which your share of costs is calculated for the life of the building.
The “body corporate” is simply everyone who owns property in the development. When the titles first issue a legal entity is created and given a number, but all it is is the owners. The owners might in turn appoint a body corporate secretary or manager to help run the development.
Common property means any property in the development that is not a principal, accessory or future development unit. The definition gets a little more complicated in the new act, and the concept of “base land” is introduced, but more about that on another day.
Debra Dorrington
A big welcome to Debra Dorrington today, of Alexander Dorrington Law, Debra is a specialist in property law and our new blog author, she will be keeping you up to date with any changes which may effect apartment investors.
Debra is available to answer any questions you may have about structuring your property investment portfolio on the ‘Investment Q&A’ page of this blog.
We look forward to reading Debra’s posts and welcome the addition of more rich data for our property investor community.
