The new Act and its Regulations has now been in force for 4 months and you’ve got until 20 December to run an AGM.
Good and bad body corporates exposed
During this time, some owner run bodies corporate have struggled to assist owners to produce documentation to buyers when a unit is placed on the market. In one instance, the owners of a unit titled property did not even realize that they were a body corporate and had obligations as such until one of the owners decided to sell. The owner had no idea that their property was unit titled or that they had been in breach of the old Act and now the new.
The new Act is exposing poorly run bodies corporate. With the disclosure regime being the responsibility of the owner, some are struggling to have information to include in the prescribed disclosure statements. Without properly run meetings, adequate and proactive financial planning, levies being struck appropriately to service the building and its common areas, these bodies corporate are being highlighted as less attractive purchase options than well run bodies corporate.
A recent example is a buyer who had owned a unit titled property in a well-run body corporate in central Wellington. They had sold their apartment some years ago having purchased a lifestyle property on the coast. With work commitments bringing the buyer back into central Wellington, they wished to purchase a small apartment as a weekly base. The buyer having originally been in a well-run body corporate, was not interested in purchasing into a body corporate that couldn’t produce meaningful financial statements, where levies were not adequately servicing the building and basic amenities and meeting minutes were unable to be produced appropriately. They walked away from several apartments that were for sale.
Unlike poorly run bodies corporate, well run bodies corporate with good governance structures, good financial planning and a supportive secretary who understands the new Act and its requirements are working their way through the Act and its comprehensive Regulations. These bodies corporate are undoubtedly becoming more attractive to buyers.
For bodies corporate that have been limping along under the old Act and still haven’t fully embraced there new Act, there is every chance that they can redeem themselves and work towards being well run, compliant and attractive properties to purchase. However, the pressure to be compliant is on.
AGMs required by 20 December
All bodies corporate must have an AGM by the 20th of December 2011, even if they had one prior to the 20th of June this year.
Calling an AGM
To call an AGM is not an easy task.
The body corporate Chairperson must:
- send out the intention to hold the AGM three weeks from the AGM date with supporting papers
- send the AGM agenda two weeks prior to the meeting with supporting papers.
Running the first AGM
The first AGM agenda under the new Act is not as straightforward as it has been under the old Act.
The first agenda must contain certain resolutions to work towards new Act compliance and a number of these will need drafting. To name but a few; governance structures, financial planning, long term maintenance planning, fund management, and operational rules. It is important to get these first resolutions right. Once they are , they then need to be reflected in the postal voting procedures for absentee or non-attending owners.
A well run Body Corporate is a good investment
Through a well-organized and run first AGM under the new Act, a body corporate can show to prospective buyers that they are embracing the Act’s changes and working towards being well run and proactive. They will be more attractive as purchase options than ones that are simply ignoring the legal changes. Buyers are looking to purchase into a body corporate that will give them peace of mind not one that will cause them problems.
To assist in understanding the new Act and its requirements, the Unit Titles Manual offers a guide for owners to understand the Act and its regulations and will be an invaluable resource for all owners in unit titled properties and their associated professionals.
For more information:
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