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Unit Titles Act 2010 – damage repair

Unit Titles Act 2010 – damage repair

Published in September 2018

Who is to carry out the repair work, and who is to pay for it?

During the winter period we received several queries regarding damage to unit title properties (varying from fallen trees to flooding of lifts), and in particular inquiring as to who is to carry out the repair work, and who is to pay for it.

A fairly consistent formula is applied when damage arises.

Insurance

The first thing to do in the event of damage is notify the insurer. While they may not give you ‘the answer’ in terms of who is to carry out the repair works, and how it is to be paid for, a discussion with the insurer is nearly always required regardless of whether a claim is to be raised.

Who is to carry out the work?

The general rule of thumb is that unit owners must carry out repair work required within their unit boundary, and the body corporate must carry out repair work with regard to common property and “building elements and infrastructure”.

The trouble is, so often when repair work is required it spans the obligations of both unit owners AND the body corporate, and the question as to who should carry out specific repair work is muddied. This can lead to problems for unit owners and the body corporate if not managed correctly. For example, where a unit owner carries out repair works that include part of their unit but also a portion of common property, and those repair works result in further latent damage to the building, who is responsible for rectifying the latent defects to the common property when they arise? Is there also an insurance issue with the unit owner repairing common property? Do they become personally liable?

The current approach of the New Zealand courts is to take a pragmatic approach to the application of the Unit Titles Act 2010 when it comes to repairs and maintenance; one of the leading cases outlines that the recognition of flexibility and responsiveness, the requirement to manage buildings on an economically sustainable basis, and the requirement to protect the integrity of the development as a whole are all important factors to consider (Wheeldon v Body Corporate 342525 [2015] NZHC 884).

In light of the Wheeldon decision, as a general rule, where there are repairs required to the common property along with specific units our view is that the body corporate should carry out the repair works where possible. If the repair works are left to individual unit owners then there are a number of risks including: lack of uniformity; the impact (both immediate and latent) on common property, units, building elements and infrastructure; delays in unit owners carrying out works; shortcuts being taken; the potential breaches of body corporate insurance.

In order for the body corporate to undertake repair works, the works either need to fit inside the scope of the Act, or the body corporate need to take on responsibility for repairs relating to private property. In order for the works to fit inside the scope of a body corporate’s responsibility they must relate to common property, assets designed for use in connection with the common property, assets owned by the body corporate, or building elements and infrastructure that relate to or serve more than 1 unit.

Who pays?

If repair works are lawfully carried out by individual unit owners then the associated costs will be the responsibility of that unit owner.

If repair works are carried out by the body corporate then those costs will either be chargeable directly to the relevant unit owner (to the extent that the repairs are to building elements that exist inside that unit owners principal unit), or allocated on an ownership or utility interest basis between the members of the body corporate, and then possibly re-allocated to specific unit owners on the basis of a benefit assessment.

This article is published for general information purposes only. Legal content in this article is necessarily of a general nature and should not be relied upon as legal advice. If you require specific legal advice in respect of any legal issue, please feel free to contact us.



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