Considering buying or selling a company share apartment in NZ? Learn how ownership works, what legal risks to watch out for, and how Core Legal in Masterton and Wellington can help.

Understanding Company Share Apartments in New Zealand: A Legal Guide

If you’re looking to buy or sell property in New Zealand, you may come across a company share apartment—an alternative form of property ownership that differs significantly from freehold or unit title ownership. While this arrangement was more common before the Unit Titles Act 1972, many company share apartments are still in use today across Masterton, Wellington, and other parts of New Zealand.

At Core Legal, we regularly assist clients navigating the unique legal considerations involved with buying or selling a company share apartment.

What Is a Company Share Apartment?

In a company share ownership model, the land and buildings are owned by a company. Instead of owning a freehold title to an individual apartment, purchasers buy shares in that company. These shares entitle them to occupy a specific apartment, typically through an occupation licence or lease agreement with the company.

This ownership model can be more complex than standard titles and often comes with limitations on selling, financing, and even day-to-day living arrangements.

Key Features of Company Share Apartments

1. Occupation Licences and Leases

An occupation licence or lease is what gives the shareholder the right to live in their unit. These may or may not be registered on the land title. When registered, they function similarly to a leasehold title.

Benefits of a registered occupation licence include:

• Increased buyer confidence – a registered title appears more secure.
• Improved lender security – banks are more likely to offer a mortgage.
• Clear legal rights – useful in disputes or resale.

Important Considerations When Buying or Selling

2. Review Key Documents

Before committing, it’s vital to review:

• The Company Constitution
• The Shareholders Agreement
• The Occupation Licence

These documents may include restrictions on subletting, renovations, keeping pets, or making alterations. We recommend inserting a condition into the Agreement for Sale and Purchase that allows you to approve these documents before settlement.

3. Director Consent Is Required

Any new purchaser must be approved by the company’s directors, who may request an interview. This approval process should be accounted for in your sale agreement.

4. Financing Can Be Difficult

Banks are often reluctant to lend against company share apartments because the security is over shares, not land. Without a registered occupation licence, buyers may need to provide a larger deposit, and some constitutions even prohibit mortgaging shares.

Tip: Include a finance condition in the purchase agreement to allow for withdrawal if finance is declined.

5. KiwiSaver Withdrawals May Not Be Approved

Some KiwiSaver providers do not allow withdrawals for purchasing company share apartments. Check with your provider before making an offer, or include a finance condition to allow time for enquiries.

Ongoing Costs and Insurance

Just like in a unit title development, company share owners must contribute to ongoing expenses such as:

• Building insurance
• Rates
• Maintenance and repair costs

It’s crucial to ensure that the company has adequate insurance coverage, as it will be responsible for any claims involving the structure or common areas.

No Legal Disclosure Requirements

Unlike unit titles, company share apartments do not fall under the Unit Titles Act, so there are no mandatory disclosure obligations. This makes thorough due diligence critical before purchasing. Owners should keep:

• Financial statements
• AGM minutes
• Maintenance records
• Insurance policies

Get Expert Legal Advice from Core Legal

Because of the unique legal and financial implications of company share ownership, we strongly recommend seeking advice from a property lawyer before proceeding.

At Core Legal, we offer fixed-price Initial Consultations to help you assess your legal position and avoid costly mistakes. Whether you’re buying or selling a company share apartment in Masterton, Wellington, or beyond, we’re here to help.

???? Contact Core Legal today to schedule your consultation.