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Unit Titles Act 2010 - Overused Utilities

Unit Titles Act 2010 - Overused Utilities

Published in February 2018

What happens when the common areas and the utilities become overused due to the number of occupants in the block increasing beyond what was initially anticipated?

When an apartment block is first constructed it has, pursuant to the relevant territorial authority resource and building consents, a certain number of units and a proportionate level of utilities and common areas. This matrix is developed based on formulas and an anticipated number of occupants.

So - what happens when the common areas and the utilities become overused due to the increased number of occupants in the block? 

The issue of higher numbers of occupants in residential apartment blocks often results from the increasing number of short term rentals and in commercial blocks with “start-ups” and their subsequent growth. See our recent article on short term rentals for more on residential apartment issues.

Focussing on the commercial space, the reality with businesses (start-ups in particular) is that they start with high hopes and often lease a space that is too big for them. If the business is a failure then they’ll be gone before long, but if it is a success they grow quickly, often outgrowing their rented space. But rather than moving to new premises they stay where they are (because they are locked into a medium to long term lease) and put excess pressure on the common areas and utilities. This can become an issue for a body corporate, particularly, for example, if the common toilets and associated pipes are put under more pressure than they were designed for (a recent example saw 40 people using one toilet).

What is a body corporate to do in a scenario like this?
The answer is not an easy one, and, as you would expect from a lawyer, it needs to be assessed on a case by case basis. Some things to consider include:
1. Is the problem unit complying with their consent?
2. Are they complying with the consent for the development as a whole?
3. Is the insurance policy for the development being breached?
4. Do the operational rules deal with the issue? If not, can they be drafted in such a way that they deal with it?
5. Could a covenant be registered on the supplementary records sheet?
6. Could the utility interests be adjusted?

If you are dealing with this issue then please get in touch with us, on a no obligations basis to discuss; we’d love to assist you.

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