Intentional increase in the number of Body Corporate
The Christchurch central city regeneration is taking shape with
more and more businesses now opening. This year seems to be a
tipping point with a forecasted 10,000 office workers to be
situated within 300 metres of the corner of Colombo Street and
Cashel Mall by early 2017.
To support business growth and development in the inner city,
the Christchurch City Development Unit is actively promoting
attractive inner city neighbourhoods, while the now disestablished
Canterbury Earthquake Recovery Authority had a vision of 20,000
inner city residents by 2020.
The new Unit Titles Act 2010 (Act) and Unit
Titles Regulations 2011 (Regulations) overtook an
out of date Unit Titles Act 1972 and were intended to assist with
the more large scale and mixed developments for which the prior act
had fallen short.
Body Corporate developments create additional
Many of Christchurch's new inner city residential and mixed
use developments will be Body Corporate developments using unit
titles. It is important that developers are aware of some of the
requirements placed on them as original owners and to ensure
setting a framework for a successful body corporate is put in place
from the outset.
Service contracts must be of high quality
Following the deposit of a new unit plan, many service contracts
are often entered into. These can be wide ranging but common
examples are professional body corporate managers, building
managers, maintenance contracts etc. It is important that these
contracts are negotiated with skill, care and diligence. A
developer or their associates must, as the original owner, act in
the best interests of the body corporate.
Developers will face penalties for poor service
If a service contract is entered into and:
the service contract is not fair and reasonable between the
service provider and the body corporate; or
the terms of the contract are not appropriate for the
particular development; or
the powers and functions of the service provider are not
appropriate for the development and affect the body corporate's
ability to carry out its functions;
then the newly formed post development body corporate may apply
for compensation from the developer and/or apply for termination of
the service contract. Such applications for compensation can be
made up to three years following the end of the control period.
Developers must take care
Developers should take care when entering into contracts at the
time of development. They are a necessary part of the running of
the development but need to be fair. Courts have discussed what can
be considered as not "not fair" in this area. The
contracts should not give the service providers powers that exceed
those afforded to them in the Act.
Developers should carefully consider the terms of any service
contracts. For example, it does not appear reasonable to provide
for a 10 year term with renewals from the outset of the
development. The rights in the contract should be balanced and not
favouring the service provider.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Be aware that most modern subdivisions now include land covenants which are registered against the titles.
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