Key Steps for a Unit Title Subdivision in New Zealand

Unit title subdivisions provide a legal framework for multi-unit developments, allowing individual ownership of units while maintaining shared responsibility for common property. The subdivision process is governed by the Unit Titles Act 2010 and the Resource Management Act 1991 and involves various legal and administrative steps. Engaging a lawyer early in the process is crucial to ensuring compliance, avoiding delays, and addressing legal complexities. This article outlines the key considerations for successfully undertaking a unit title subdivision in New Zealand.

Key Steps in a Unit Title Subdivision

1. Obtaining Necessary Consents

Before proceeding with a unit title subdivision, developers must secure the required approvals from the local territorial authority. These include:

• Section 223 and 224 certificates under the Resource Management Act 1991, confirming compliance with subdivision conditions.
• A Section 32 certificate under the Unit Titles Act 2010, which verifies that the subdivision aligns with legal requirements and allows for the deposit of the unit plan.

A lawyer can assist in reviewing the conditions of consent to ensure they are reasonable and do not impose unnecessary restrictions on the development.

2. Preparing the Unit Plan

A licensed cadastral surveyor must prepare a unit plan that clearly defines the boundaries of each unit and common property. This plan must meet the standards set by Land Information New Zealand (LINZ) and is essential for the subdivision process. Your lawyer will work alongside the surveyor to ensure the plan is legally compliant and meets the requirements for registration.

3. Valuation and Ownership Interests

A registered valuer must assess and allocate ownership interests for each unit within the development. These interests are typically based on unit size, value, or other relevant factors. The valuer must provide a certificate (Form 5) confirming the ownership interest allocation. A lawyer can review the ownership interest allocations to ensure they are legally sound and equitable for future unit owners.

4. Legal Documentation, Lender, and Lessor Consents

Once all necessary consents, plans, and valuation assessments are obtained, the lawyer will:

• Prepare and lodge legal documentation with LINZ, ensuring compliance with statutory requirements.
• Obtain necessary approvals and consents from lenders if the property is subject to a mortgage. Banks and financial institutions typically require approval before the subdivision can proceed, as it affects the security they hold over the property.
• Secure consents from the lessor, if applicable, where the property is leasehold. The lease agreement may require the lessor’s approval before subdivision can take place.

Your lawyer’s role in coordinating these steps is critical to ensuring there are no unexpected obstacles in the title registration process.

5. Lodgement with LINZ and Issuance of Titles

Once the unit plan is approved and all necessary consents have been obtained, the lawyer lodges the required documentation with LINZ. Upon approval, individual titles are created for each unit, and a supplementary record sheet is generated, listing all unit titles, common property, and any applicable easements or operational rules.

6. Establishment of a Body Corporate

Upon the deposit of the unit plan, a body corporate is automatically formed. The body corporate consists of all unit owners and is responsible for managing common property, maintaining records, preparing financial statements, holding insurance, and enforcing operational rules. Your lawyer can assist in drafting and registering operational rules, ensuring they provide clear guidelines for owners and future-proof the development.

7. Operational Rules

The unit title subdivision process includes setting operational rules to govern the use of common areas and ensure a functional and cooperative living or working environment. These rules must be registered with LINZ to be legally enforceable. A lawyer can draft operational rules tailored to the development, covering matters such as noise restrictions, parking, and maintenance obligations.

8. Financial and Administrative Management

A unit title subdivision requires careful financial planning, including:

• Budgeting for maintenance and operational expenses.
• Establishing levy structures for unit owners.
• Setting up a designated bank account to manage subdivision-related funds.
• Compliance with financial reporting and legal obligations.

9. Key Legal Considerations

Role of Your Lawyer and Early Involvement

Engaging a lawyer early in the unit title subdivision process is essential to:

• Review resource consent conditions to ensure they align with your development goals.
• Draft and register easements, covenants, and operational rules that govern common property use and protect property owners' rights.
• Prepare and lodge all legal documentation with LINZ to obtain new unit titles.
• Obtain necessary approvals and consents from lenders and lessors where required.
• Advise on unit ownership structures and how they impact obligations under the Unit Titles Act.
• Ensure financial and governance structures for the body corporate are properly established.

Conclusion

A unit title subdivision is a complex legal process requiring careful planning, compliance with statutory requirements, and the establishment of effective governance structures. Involving a lawyer early in the process ensures that all legal considerations are properly addressed, including obtaining necessary consents from lenders and lessors, preparing legal documentation, and ensuring compliance with the Unit Titles Act.

For more information or legal assistance regarding unit title subdivisions, contact the team at DTI Lawyers on (07) 282 0174.