Body corporate management rules

department of building and housing body corporate operational rules and body corporate rules and regulations
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Dr.KiaraSimpson,United States,Researcher
Published Date:05-07-2017
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Body Corporate Operational Rules MARCH 2014MINISTRY OF BUSINESS, INNOVATION AND EMPLOYMENT BODY CORPORATE MARCH 2014 OPERATIONAL RULES 3 Introduction This guide provides information about: This publication is to help unit › Body corporate operational rules owners, bodies corporate and › Default rules sector professionals understand › How to change rules body corporate operational rules › Setting rules for specific types of development • Residential under the Unit Titles Act 2010 • Commercial (the Act). In particular it includes • Mixed use important information about the • Layered • Changes from the 1972 Act. default operational rules, and how This document has been published by the to set operational rules to suit a Ministry of Business Innovation and Employment specific type of development. as a guide to body corporate operational rules under the Unit Titles Act 2010. The guidance contained in this document is general, and may not apply to your specific circumstances. Before making changes to the body corporate operational rules, it is recommended that you obtain independent legal advice from your lawyer.MINISTRY OF BUSINESS, INNOVATION AND EMPLOYMENT BODY CORPORATE MARCH 2014 OPERATIONAL RULES 4 Body Corporate Operational Rules What are body corporate operational 1 October 2012 to review their existing rules. If rules? the body corporate did not review and change its existing rules the new default operational rules Body corporate operational rules help the body replaced any existing rules on 1 October 2012. corporate govern the unit title development. They are a set of expectations placed on unit owners What kinds of rules should the body and help prevent disputes between people who corporate have? live and work in the development. The kind of rules a body corporate needs The Unit Titles Regulations 2011 prescribe depends on the kind of development. Residential minimum default rules. The default rules cover developments will need different rules than issues applicable to most unit title developments. commercial or industrial developments, and The default operational rules (see Schedule 1 of mixed use developments might need some of the Regulations) are: each. An owner or occupier of a unit must not: Body corporate rules also reflect the individual a. damage or deface the common property characteristics of the development – whether it is b. leave rubbish or recycling material on the urban or suburban, the kind of common property common property in the development (for example, if there is a gym c. create noise likely to interfere with the use or or swimming pool) and how the individual unit enjoyment of the unit title development by owners like to live. other owners or occupiers This publication contains information specific to d. park on the common property unless the four different categories of developments that body corporate has designated it for car you can use to help you decide on what rules are parking, or the body corporate consents appropriate for your development. Please follow the relevant link below: e. interfere with the reasonable use or enjoyment of the common property by other › Body Corporate operational rules for owners or occupiers residential developments › Body Corporate operational rules for An owner or occupier of a unit must dispose of Commercial Developments rubbish hygienically and tidily. › Body Corporate operational rules for mixed- The Act enables bodies corporate to add to use developments or amend these rules to suit the individual › Body Corporate operational rules for Layered characteristics of their development. developments. All unit owners, occupiers, tenants and the The examples given in these sections of the body corporate must obey the body corporate guidebook are general. If you are designing operational rules that apply to the development body corporate operational rules to add to the they live or work in. default rules in regulations you should consider As a body corporate can amend or add to the the specific circumstances of your development. default rules set out in the Regulations you Before making changes to the body corporate should ensure you have the most up-to-date operational rules, the Ministry of Business copy of the operational rules that apply to your Innovation and Employment recommends that development. Contact your body corporate you obtain independent legal advice from your chairperson or body corporate manager for a lawyer. copy if you don’t have one. The bodies corporate of developments that existed before the new Act came into force had a transitional period up to MINISTRY OF BUSINESS, INNOVATION AND EMPLOYMENT BODY CORPORATE MARCH 2014 OPERATIONAL RULES 5 Someone in my development is not How do we make changes to the new following the rules. What can I do? operational rules? The body corporate and unit owners have the There are restrictions on what you can make power to enforce the body corporate rules. operational rules on. Additions or alterations must: You might like to consider dealing directly with › relate to the control, management, the unit owner as a first step. Often, people are administration, use or enjoyment of the units unaware that there are body corporate rules or or the common property; or what the body corporate rules are. You could take along a copy of the rules and remind them that › relate to the regulation of the body corporate. they need to follow them. In addition, alterations or additions to the If the person who is not following the body operational rules cannot: corporate rules is a tenant, you should deal › confer or impose any powers or duties on the directly with the unit owner, landlord or their body corporate that are not incidental (do representative, in the first instance. They are not relate) to the powers and duties the body responsible for ensuring the tenant follows the corporate has under the Act; and rules. › be inconsistent with any provision of the Act, If dealing directly with the unit owner doesn’t Regulations and any other act or rule of law. work, or isn’t appropriate, you can make an If you decide to change the operational rules you application for dispute resolution to the Tenancy must pass an ordinary resolution to do so. Tribunal or through the Courts. You can find more information on dispute resolution here and the Changes to the body corporate operational rules application form here. should be fair and even-handed. If you disagree with changes the body corporate makes to the Do we need to incorporate rules and voted against the change, you can apply some of our old rules into the new to the Tenancy Tribunal or Courts for relief on the rules? basis the rule change is unfair or inequitable. Bodies corporate that existed under the Unit Putting the changes into effect Titles Act 1972 are still able to amend their rules. You need to lodge rule changes with Land If the Act or Regulations don’t cover all of the Information New Zealand in order for them to matters in your existing rules, the body corporate take effect. Go here to find the form you will need may amend the default operational rules. When to lodge. you are making this decision: Lawyers and conveyancing practitioners can › make sure your rule change is not ultra vires lodge the form electronically using Landonline. (meaning the body corporate does not have People not registered to use Landonline will the power to make the rule, because it doesn’t need to lodge the form through their lawyer meet the requirements in the Act). See the or conveyancing practitioner, or manually with next section in this publication for how to Land Information New Zealand. You can find make changes to the operational rules instructions on how to lodge a manual dealing › have a look at the sections of this publication at www.linz.govt.nz/survey-titles/land- specific to your type of development (for registration/manual-dealing. example residential or commercial) to see the kinds of matters operational rules could cover › talk to the other owners in the development about what kinds of rules they think there should be.MINISTRY OF BUSINESS, INNOVATION AND EMPLOYMENT BODY CORPORATE MARCH 2014 OPERATIONAL RULES 6 Residential Developments Depending on what kind of common property you This section provides guidance for have, more operational rules might be necessary. body corporates of a residential For example some developments make rules development that want to add to or about, amend the default operational rules › hours of use of recreational or other facilities in the Regulations. › whether parts of the common property can be used as a garden Considerations for residential › conditions of use of certain facilities developments › whether there are facilities to be used for Operational rules help the body corporate govern specific purposes (such as service lifts or the development and can help prevent disputes loading docks for moving furniture into or out between unit owners and occupiers. of units) When you are considering what kinds of › how often chattels are cleaned operational rules you need in your development, › details of any preferred suppliers or trades you should think about: people the body corporate has contracted for › what kinds of matters people have had servicing units or the common property (for disputes about in the past, why these disputes example, an electrician or plumber who unit arose and whether rules could help prevent owners can contact if they have electrical or disputes from arising in the future plumbing issues) › whether there are rubbish or recycling › what kinds of facilities are there for everyone facilities in the development and how rubbish to use and whether rules are a way to protect or recycling is disposed of or ensure access to those facilities › security measures, including whether there › what kind of behaviour is acceptable in the are security codes or cards for accessing the development and what kind of behaviour is building and restrictions on who these are not given to › what rules are fair to all unit owners. › if there are car parking facilities on the common property, where owners and guests Common property are allowed to park The body corporate operational rules can be used › health and safety in using common property, to protect the common property from damage such as safe areas for children to play or harm and ensure unit owners and occupiers › whether there are restrictions on signage, can access the common property. Unit title such as “for sale” signs (for example, the body developments can have a wide range of common corporate may want to protect the common property, for example: property or external appearance of the › recreational facilities such as swimming pools, development by limiting where signs can be spas and saunas, gyms placed). › outdoor facilities such as lawns and gardens, roof-top terraces, driveways Units › other facilities such as halls, common rooms The way people use their units can impact on › building facilities such as lobbies, lifts, rubbish other unit owners or the common property. and recycling facilities, security Under the Act, unit owners must keep their unit › chattels such as lobby furniture, gardening or in sufficient repair so that no damage or harm is cleaning equipment, artwork done to other units or the common property. In › infrastructure such as aerials, satellite dishes, addition, the default operational rules state that telecommunications wiring. unit owners can’t create noise that interferes MINISTRY OF BUSINESS, INNOVATION AND EMPLOYMENT BODY CORPORATE MARCH 2014 OPERATIONAL RULES 7 with another person’s right to quiet enjoyment rules for unit title developments. You should read of their unit or interferes with other owners’ or the Act and the Regulations before you add new occupiers’ use of the common property. rules about these matters, as you cannot make a rule that contradicts the law. Depending on what kind of development you live in, more operational rules might be necessary. For Other possible rules example, some developments make rules about: › where owners or occupiers can hang out Depending on what kind of development you live washing in, more operational rules might be necessary. For example, some developments make rules about: › whether owners or occupiers are allowed to have pets or whether certain kinds of pets are › fire drills and evacuation procedures (the allowed development may be required by law to have these in place) › the external appearance of units, such as whether there are approved colour schemes › prohibiting the body corporate from for painting or rules about signage visible unreasonably withholding consent in cases from the unit where body corporate consent is required under any operational rules › the internal fit-out of units, such as whether particular floor coverings must be used to › whether the chairperson (or another officer prevent noise transmission of the body corporate) has additional responsibilities to those outlined in the › prohibiting parties after certain hours Regulations. › restrictions on keeping hazardous materials If the body corporate engages someone to in units undertake duties on its behalf, such as a › pest control in units professional body corporate manager or building › behaviour of unit owners, occupiers and manager, you should exercise caution in making guests. rules that outline their responsibilities. These responsibilities are best established through a Administration and governance contract. The body corporate may make rules on how it will operate. The Act and the Regulations contain comprehensive administration and governance Commercial Developments This section provides guidance for a body › whether the units are used by the owner or corporate that wants to add to or amend the whether there are leasing arrangements in default operational rules in the Regulations for a place commercial development. › what kind of duties the body corporate is responsible for undertaking Considerations for commercial › what rules are fair to all unit owners. developments Operational rules assist the body corporate to Other rules in commercial govern the development and can help prevent developments disputes between unit owners and occupiers. Units in commercial developments may be leased. When you are considering what kinds of In these cases there will usually be formal lease operational rules you need in your development, documentation in place between the unit owner you should think about: and the tenant (for example a deed of lease). › what kind of business the units are used This lease documentation will contain additional for, such as office space, car parks or rights and responsibilities of between the parties accommodation to the lease.MINISTRY OF BUSINESS, INNOVATION AND EMPLOYMENT BODY CORPORATE MARCH 2014 OPERATIONAL RULES 8 Common property Units Commercial unit title developments can have a The way people use their units can impact on wide range of common property and assets, for other unit owners or the common property. example: Under the Act, unit owners must keep their unit › building facilities, such as lifts, lobbies, in sufficient repair so that no damage or harm is stairwells, rubbish and recycling facilities, done to other units or the common property. In loading dock areas addition, the default operational rules state that unit owners can’t create noise that interferes › common facilities, such as staff or customer with another person’s right to quiet enjoyment car parking areas, cafeteria space, shower of their unit or interferes with other owners’ or facilities occupiers’ use of the common property. › recreational facilities, such as gardens, gyms Depending on what kind of development you live › infrastructure, such as fire alarms, aerials, in, more operational rules might be necessary. For satellite dishes, telecommunications wiring. example, some developments make rules about: The default operational rules can be used to › whether there are any specific requirements protect the common property from damage or for the use of units, for example, restaurants harm and ensure unit owners and occupiers can must have a liquor license, car parks may only access the common property. be used for car parking Depending on what kind of common property you › permitted trading hours (for example for have, more operational rules might be necessary. security reasons or as required by local For example some developments make rules bylaws) about: › restrictions on keeping hazardous materials › whether there are carparking facilities on the in units common property and who is able to use them › the external appearance of units, such as › whether there are restrictions on signage, whether there are approved colour schemes such as advertising (for example, the body for painting or rules about signage visible corporate may want to protect the common from the unit property or external appearance of the › the internal fit-out of units, such as whether development by limiting where signs can be particular floor coverings must be used to placed. There may also be council by-laws that prevent noise transmission prohibit signs in certain locations). › restrictions on installing equipment or other › security measures, including whether there fixtures (such as heavy objects) are security codes or cards for accessing the building and restrictions on who these are › details of any preferred suppliers or trades given to people the body corporate has contracted for servicing units or the common property (for › whether there are restrictions on hours for example, an electrician or plumber who unit delivery of goods, documents or other parcels owners can contact if they have electrical or › whether there are designated smoking areas plumbing issues). › whether there are facilities to be used for specific purposes (such as service lifts or loading docks for moving furniture into or out of units) › whether there are rubbish or recycling facilities in the development and how rubbish or recycling is disposed of.MINISTRY OF BUSINESS, INNOVATION AND EMPLOYMENT BODY CORPORATE MARCH 2014 OPERATIONAL RULES 9 Mixed Use Developments › what kind of behaviour is acceptable in the This section provides guidance for development and what kind of behaviour is a body corporate that wants to add not to or amend the default operational › what rules are fair to all unit owners rules in the Regulations for mixed › what kind of businesses are involved use unit developments. › whether the units are used by the owner or whether there are leasing arrangements in Considerations for mixed use place developments › what kind of additional duties the body Operational rules help the body corporate govern corporate is responsible for undertaking. the development and can help prevent disputes The body corporate could decide that specific between unit owners and occupiers. rules apply to only certain types of units in the Deciding on rules that apply in mixed use development. For example, if there is a hotel or developments can be difficult. Finding a balance other accommodation service provided, there that will ensure the needs of residents, tenants, could be specific rules that apply to those units. restaurants, bars, shops, office workers and hotel If that is the case, make sure you clearly identify owners and guests are met (for example) can take the units that are subject to those rules. You time. should also be careful to ensure that rules don’t contradict the Act or impose rules that are unfair The key challenge in mixed use developments or restrict the rights of owners under the Act. is that the different uses of unit can have competing or contradictory interests. For Involve unit owners from a range of different example, residential owners might have noise unit types in deciding on the rules. This will concerns about bars or nightclubs that stay open help ensure the rules are fair on everyone and late. Conversely, business owners will want as don’t contradict any other law or contractual much freedom as possible to make good business agreements that are in place. decisions, including hours of operation and what services they provide. Other rules that can apply in mixed use developments Attempting to keep everyone in the development happy relies on having a good, comprehensive set Units in mixed use developments may be used of body corporate rules. for commercial or retail purposes. In these cases there will usually be formal lease documentation When you are deciding on what rules you need in in place between the unit owner and the your development, see the sections on residential tenant (for example a deed of lease). This lease developments and commercial developments. documentation will contain additional rights You will likely need a combination of the and responsibilities of between the parties to the suggested topics in your rules. In addition, see lease. the tips below. Other contractual arrangements may also need Tips: what to think about when to be taken into consideration. For example, deciding on rules if accommodation units make up a part of the building there may be contracts in place that When you are considering what kinds of cover management rights. operational rules you need in your development, you should think about: There are also other laws and bylaws that can affect commercial and retail units, for example › what kinds of matters people have had the Sale and Supply of Alcohol Act, food health disputes about in the past, why these and safety regulations and council bylaws, which disputes arose and whether rules could help cover a number of areas such as business uses prevent disputes from arising in the future and parking. › what kinds of facilities are there for everyone to use and whether rules are a way to protect or ensure access to those facilitiesMINISTRY OF BUSINESS, INNOVATION AND EMPLOYMENT BODY CORPORATE MARCH 2014 OPERATIONAL RULES 10 Layered Developments This section provides guidance for a body or ensure access to those facilities corporate that wants to add to or amend the › what kind of behaviour is acceptable in the default operational rules in the Regulations in a development and what kind of behaviour layered development. is not › what kind of businesses are involved What is a layered development? › whether the units are used by the owner A layered development is where several bodies or whether there are leasing arrangements corporate are grouped together under an in place umbrella body corporate. A layered development › what kind of additional duties the body consists of one “head” unit title development and corporate is responsible for undertaking. one or more “parent” and/or “subsidiary” unit It will be important to think about where you title developments. sit in the layered structure – whether your There is a useful diagram in Schedule 1 of the Act development is part of another body corporate or that illustrates the relationship between parent whether other bodies corporate are part of yours. and subsidiary unit title developments. This will affect how you make some of your rules – especially the ones about common property. Considerations for layered If you are part of another body corporate you developments can use their common property, but they will Operational rules help the body corporate govern set rules. Similarly, if another body corporate is the development and can help prevent disputes part of your body corporate they can use your between unit owners and occupiers. common property and this might impact on the Deciding on rules that apply in mixed use rules you make. developments can be difficult. Often, layered Also important are the operational rules of developments will also be mixed use – meaning the other bodies corporate in the layered the different bodies corporate can have different development. Ideally, the rules for each body and sometimes competing agendas. corporate in a layered development should align – or at least not be in conflict. Making everyone in the development happy relies on having a good, comprehensive set of body Under the Act, if there is a conflict between corporate rules. rules of: When you are deciding on what rules you need in › a subsidiary body corporate and it’s parent, your development, see the sections on residential the parent body corporate’s operational rules developments and commercial developments. apply You will likely need a combination of the › a subsidiary body corporate and the head suggested topics in your rules. In addition, see body corporate, the head body corporate’s the tips below. operational rules apply. Bodies corporate in layered developments might Tips: what to think about when also choose to add in some rules that make deciding on rules it clear how the governance structure works When you are considering what kinds of across the development as a whole. For example, operational rules you need in your development, bodies corporate could choose to make rules you should think about: that clarify the notice periods for meetings (in › what kinds of matters people have had cases where the notice periods need to be longer disputes about in the past, why these disputes than the minimum timeframes provided in the arose and whether rules could help prevent Regulations) – this will depend on how many disputes from arising in the future subsidiary bodies corporate there are in the development. › what kinds of facilities are there for everyone to use and whether rules are a way to protect MINISTRY OF BUSINESS, INNOVATION AND EMPLOYMENT BODY CORPORATE MARCH 2014 OPERATIONAL RULES 11 Glossary 1972 Act – the Unit Titles Act 1972 Ownership interest – the interest assigned to a unit by a registered valuer based on the relative value of the unit in relation to each of the other The Act – the Unit Titles Act 2010 units. Accessory unit – a unit designed for use with any Principal unit – a unit designed for use as a place principal unit (including a garage, parking space, of residence or business or for any other use, and or storage space). that is identified on a unit plan as a principal unit. Body corporate – an entity made up of all the Regulations – the Unit Titles Regulations 2011 unit owners in a unit title development. Unit plan – the plan of a unit title development Common property – land and facilities in a unit that has been (or will be) deposited with Land title development which are not contained in a Information New Zealand on subdivision. principal unit or accessory unit, and are shared by the unit owners. Unit title development – an area of land and buildings that has been subdivided into two Eligible voter – a person who is over the age of or more units, such as apartments, and often 16 years and includes common property shared by the unit › whose name is on the register of owners of owners. principal units as the owner or representative of the owners of that unit; or Utility interest – an interest used to calculate a › who is the nominee of a company the name of unit’s contribution to the operating account and which is on the register of owners of principal long-term maintenance account. units as the representative of the owner; or › who is a subsidiary body corporate representative.MINISTRY OF BUSINESS, INNOVATION AND EMPLOYMENT BODY CORPORATE MARCH 2014 OPERATIONAL RULES 12 PO Box 10-729 Wellington, New Zealand This document is also available on the Ministry’s website: www.tenancy.govt.nz/uta You can copy all or some of this document only if you are using it for education or public information, and you say it came from us. You cannot copy any of this document in any way for commercial use, and you cannot keep it in a retrieval system unless you ask us first. ISBN: 9780 4784 17753 (online)MB 14152 APR 17