Jargon buster

Man with flag with help written on it between piles of folders

There's a lot of technical terms to learn when you’re first getting your head around the world of body corporate management. We’ve put together this handy guide to simplify some of the more common terminology.

Absentee owners

Someone who owns the property, but does not live in it. They may, for example, own the property as a rental investment. If an owner is absent from their leased or licensed property for more than three consecutive weeks, they must appoint a person in New Zealand to act as their agent. Find out more about this clause in the Residential Tenancies Act 1986.

Accessory unit

A unit that is attached to one or more of the principal units that is intended to be used for a different purpose to the principal or main unit. For example, this could be a carpark, storage locker or pool.

Annual General Meeting (AGM)

The Annual General Meeting or AGM is a gathering of all of the members of the body corporate to discuss and make decisions about matters that affect the unit title development. A body corporate must hold an AGM at least once during a calendar year. Find out more about what happens during body corporate meetings.

Annual levy (also called body corporate levy or body corporate fees)

The money that each unit owner is required to pay every year to enable the body corporate to fulfil its commitments to the unit title development. For example, the levy might cover maintenance, insurance and utility charges for common services.

Body corporate

A body corporate is a collective entity made up of all the unit owners in a unit title development. If you are the owner of a unit, you’ll be a member of your body corporate, as will your fellow unit owners.

Body corporate levy

See annual levy.

Body corporate meetings

The meetings held by the body corporate to discuss and make decisions about matters affecting the unit title development, such as maintenance, insurance, levies and financial affairs. There are two types of meetings - Annual General Meeting (AGM) and Extraordinary General Meeting (EGM).

Body corporate rules

The rules that all of the unit owners have to comply with. They are designed to help prevent disputes between the people who live and work in the development. Read more about the body corporate operational rules.

Common property

The parts of the unit title development that are owned collectively by all of the unit owners, for example, shared driveways, lifts, or swimming pools. Every unit owner is responsible for the common property.

Disclosure statements

Disclosure statements contain information about the unit title which is designed to assist buyers with their purchasing decision. Sellers are required to provide this information under The Unit Titles Act 2010. There are three types of disclosure:

Pre-Contract Disclosure Statement - which the seller provides before entering into an agreement for sale and purchase

Pre-Settlement Disclosure Statement - which the seller provides after entering the agreement for sale and purchase but before settlement of the sale.

Additional Disclosure - which the seller provides on request of the buyer.

If you would like to know more about disclosure statements, talk to one of our body corporate managers.

Extraordinary General Meeting (EGM)

An EGM is a meeting that can be called by the chairperson or the body corporate committee (if there is one). If at least 25% of unit owners request one, then it must be called by the chairperson. Find out more about body corporate meetings.

Long-Term Maintenance Fund

Money that is set aside in a fund by the body corporate to pay for future planned maintenance of the unit title development. Find out more about long term maintenance plans in a unit title development.

Mediation

The process of trying to resolve a dispute between two parties using the services of an independent mediator. The mediator does not make decisions, but does encourage discussion between the two parties and tries to help them reach an agreement. Find out more about dispute resolution.

Operational Rules

Rules set up to help the body corporate govern the unit title development. You can read all about body corporate operational rules on the Ministry of Business, Innovation and Employment website.

Ownership interest (previously known as unit entitlement under the Unit Titles Act 1972)

This is the figure used to raise the funds for items such as the capital improvement fund. This is established when the property is developed and is based on the value of individual units, proportional to the other units in the same development.

Professional manager (also known as body corporate manager)

Body corporate managers are hired to help the body corporate manage their affairs. This can include things like organising meetings, preparing financial statement, collecting levies and much more. Find out how Barfoot & Thompson Body Corporate can help your body corporate.

Proxy

A proxy is a person who represents an eligible voter at a meeting, when that person can’t attend themselves.

Quorum

In the case of a body corporate meeting, the quorum is the people who can vote on behalf of at least 25% of the principal units. Read more about body corporate meetings and quorums.

Special levy

Money raised by the body corporate for a special purpose, which is separate to the annual levy fund. For example, to cover a remediation project.

Special resolution

When the body corporate makes a decision which could have significant consequences for the unit owners (such as selling part of the common property), a special resolution is needed. For a special resolution to pass, 75% of those present who are entitled to vote, must vote in favour of the motion.

Trust Account

An account which holds money from the body corporate members, and is separate from all other money.

Unit property

The area of the unit title development that belongs exclusively to an individual unit and is not shown as common property on the unit plan. Unlike common property, unit property is the sole responsibility of the owner of relevant unit.

Unit plan

Held by Land Information New Zealand, the unit plan shows the lot, principal units, accessory units, common property and unit entitlements. The unit plan also shows areas that are designated as ‘common property’ and ‘private property’.

Unit title (also known as strata title)

When a property is divided into 2 or more units that are owned separately, but which share a common area with other unit owners. As the owner, you have sole use of your private property, as well as a share of the common land.

Unit title development

An area of land and buildings that has been subdivided into two or more units, such as apartments, and often includes common property shared by the unit owners.

Unit Titles Act 2010

The current legislation that governs body corporates. It came into force on 20 June 2011. Read the Unit Titles Act 2010.

Unit Titles Regulations 2011

The regulations that support the Unit Titles Act 2010. Read the Unit Titles Regulations 2011.

Utility interest

This is used to calculate how much each owner contributes to the operational costs of the body corporate, relative to the use or benefit of specific utilities in a body corporate. For example, owners that don’t use the lift in their building because their unit is on the ground floor may not be required to contribute to the lift utility interest. Read more about utility interest and ownership interest.