Unlocking the Benefits of Body Corporate Loans for Remediation: How Section 74 High Court Orders Can Help

As the number of multi-unit residential developments across New Zealand grows, so too does the need for urgent and sometimes large-scale remedial works - particularly weathertightness repairs, structural reinforcements, and seismic upgrades. For bodies corporate facing significant remediation challenges, funding these works in a timely and equitable manner is one of the most critical hurdles.

At the heart of the solution is the body corporate loan, a financial instrument that provides a practical, scalable alternative to traditional special levies. Yet, one of the most overlooked enablers in this process is the ability to obtain a Section 74 High Court order under the Unit Titles Act 2010 (UTA) - a powerful legal tool that can pave the way for effective decision-making and remove dissenting roadblocks.

Why Consider a Body Corporate Loan?

Body corporate loans are specifically tailored to enable a building’s collective ownership group to fund necessary works without relying on every unit owner to contribute their full share upfront. The benefits include:

• Immediate access to funds, allowing remedial works to begin promptly and avoid further damage or cost escalation.
• Equitable treatment of owners, including the ability to structure repayments over time—important for owner-occupiers, retirees, or others who may be cash constrained.
• Preservation of property value, by addressing serious building defects that would otherwise depress resale prices or affect insurability.
• Administrative simplicity, as the body corporate takes on the loan and levies owners over time—typically aligned with quarterly contributions.

Despite these benefits, many bodies corporate struggle to achieve the necessary resolution thresholds required under the UTA to approve such funding - especially in developments with absentee owners, differing financial capabilities, or disputes over the scope of works.

The Role of Section 74: A High Court Solution to Owner Impasse

Where a body corporate cannot achieve the required special resolution (typically a 75% majority) to approve a long-term loan or significant remediation scheme, Section 74 of the Unit Titles Act 2010 provides a vital legal remedy.

Section 74 enables a body corporate - or an individual owner - to apply to the High Court for an order to perform or require remedial works that are necessary to protect the building or common property.

Importantly, the Court can also authorise:

• The borrowing of funds to carry out these works.
• The allocation of costs among unit owners, even where not all owners agree.
• The appointment of an administrator to make or implement decisions on behalf of the body corporate.

This is a critical safety valve for developments where disagreement or inertia could otherwise result in further building degradation, financial hardship, or exposure to legal liability.

Case Law in Practice

Courts have consistently recognised that failing to act on serious remediation matters—particularly those affecting health, safety, or habitability—is not an option. In several cases, the High Court has used Section 74 to override minority objections, where the majority of owners supported prudent and necessary action.

When coupled with expert reports (e.g. from building consultants or quantity surveyors) and evidence of attempted engagement with owners, the Court has shown a willingness to intervene decisively to support collective building health and safety

How Legal Counsel Can Assist

Engaging legal experts early in the remediation journey can streamline the process and protect the body corporate’s legal standing. Key services include:

• Advising on whether a Section 74 application is appropriate or likely to succeed.
• Drafting High Court applications and supporting affidavits.
• Reviewing funding proposals and lender documentation.
• Ensuring compliance with the Unit Titles Act and associated body corporate rules.

Conclusion: Act Now, Not Later

Remediation is rarely convenient - but the longer it is deferred, the more costly and complex it becomes. Body corporate loans offer a sensible funding pathway for essential works, and the High Court’s Section 74 powers provide a means of resolution where internal consensus cannot be reached.

By combining financial foresight with legal strategy, bodies corporate can secure the future of their buildings - and protect the wellbeing of their owners and occupants.