Property Disputes involving Body Corporates

The developer has gone broke and the new owner will not honour the previous contractual agreements.

Under the Torrens system of land titles, which is used in New Zealand, unless any matter agreed to with your property is registered on a property certificate of title, the agreement falls away upon the title transferring from one legal entity to another. In other words, when the new developer takes title to the remainder of the development, they potentially have no obligation to you under your agreement with the previous owner. Depending on your situation, you may have some legal redress against this, however, you will need legal advice to determine the likelihood of this. Unfortunately, this ultimately results in someone buying into a multi-unit or multi-stage complex with a set of rules, terms, conditions and future promises only to discover that, after the developer has gone broke and the mortgagee has on sold the balance of the development, the new person comes in with a clean slate and does not have to honour the obligations of the previous developer. Each case is different and you need good legal advice to determine your legal rights. It is in the developer's interest to keep the current unit holders happy, otherwise, they could be very destructive by effectively either hindering any progress by not giving any cooperation with the new owner of the development and/or carrying on in such a way as to disrupt the sales process of the unsold units. Both scenarios are highly undesirable, however, it is amazing the lengths some emotive people will go to when they feel personally aggrieved and at a financial loss over their property rights though an action that was not of their making.

At the end of the day, everyone has to try and make the best of a bad situation. Working against each other will only make matters worse and will cause everyone lots of grief. Taking the matter to court is not desirable as, yes, there will be at least one loser (in reality everyone will lose, it's just that one party may lose less than others), however, you are still connected via this property relationship which will be an ongoing source of angst for a long time. Mediation, on the other hand, is a much better approach. The mediator will work with all the parties involved to help them negotiate their own settlement that they voluntarily agree to. 80-85% of matters taken to mediation result in a successful outcome. Prior to attempting to resolve the dispute, each party has a position they believe in. The mediator will help all the parties move that position to a new common position. This position is a place that they won't necessarily believe in, however, for many other reasons, it is a position that, once having taken other matters into consideration, it is a solution that they can live with. Don't forget that the mediator has no power to decide for the parties or to tell them who is right or wrong or what they should do. Reasons people move to this position include:

1. The value of certainty (i.e. a known, quantified result) as opposed to uncertainty regarding such things as how long the legal process will take and how a Judge will rule.
2. The cost of the legal proceedings, including lawyer costs, court costs, cost of expert witnesses and reports.
3. The value of having the door being closed on the matter so it stops affecting your emotional state, both at work and home, and allows you to focus on more productive and pleasurable pursuits.
4. The opportunity to start restoring the business relationship between all involved by agreeing on an outcome together.

The steps required to take this to mediation are, first of all, get good legal advice as to what your legal position is and, secondly, talk to the other parties with regards to utilising mediation to resolve this matter. We can assist you with talking to the other parties if you so wish. If everyone is in agreement to take the matter to mediation, then please call us on 0800 746 225 or email us at [email protected] to discuss your particular set of circumstances and how to move forward from here.