Using a unit title apartment or townhouse as security for a business loan

Plenty of New Zealand business owners have their equity tied up in an apartment, a townhouse in a body corporate, or a small office or warehouse unit. All of these are unit titles, and all of them can secure business finance. The catch is that a lender isn’t only lending against your front door. It’s lending against a share of a building that a body corporate runs, and it wants to know that building is well managed, insured and not about to send you a large bill.

The good news: almost everything a lender asks for already exists in the body corporate’s files. Get it into your hands before anyone asks and a unit title loan can move as quickly as one on a standalone house.

Can a unit title property secure a business loan in New Zealand?

Yes. A principal unit — the apartment, townhouse or commercial unit you own — has its own Record of Title, and a lender can register a mortgage over it like any other property. Property-secured business loans run from $20,000 to $5,000,000 and can be arranged as:

• a first mortgage, if the unit is unencumbered or you’re refinancing the existing loan;
• a second mortgage, sitting behind your bank;
• caveat-style security, for short-term needs where speed matters most.

You don’t need the body corporate’s permission to mortgage your own unit. You need its information.

What does a lender check that it wouldn’t on a standalone house?

On a house, the lender’s questions stop at the boundary. On a unit title, they extend to everything you share with the other owners. Expect questions on five things.

What the lender checks	Why it matters	What slows it down
Your levies	Arrears suggest cash strain and can become a dispute	Unpaid levies or a recent special levy
Long-term maintenance plan and fund	Shows whether big works are coming and if they’re funded	Major works planned with little in the fund
Building insurance	The body corporate insures the building, not you	Missing certificate, high excess, exclusions
Weathertightness and defects	Leaks or remediation can hit values and owners’ pockets	Unresolved issues or an active claim
Earthquake-prone status	Strengthening costs fall on the owners	A current EPB notice with no funded plan

The lender and its valuer also look at the unit itself: floor area, layout, whether it’s a studio or a serviced or student-style unit, and how many similar units are on the market. Small or specialised units have fewer buyers, so many lenders accept them only at lower loan-to-value ratios, or not at all. That’s lender policy rather than law, and it varies, which is exactly why matching the right lender first matters.

Which body corporate papers should I gather on day one?

A useful shortcut: the government’s list of what a seller must hand a buyer in a pre-contract disclosure statement is close to a lender’s wish list. Unit Title Services lists the contents, including body corporate fees for the year, fund balances, three years of financial statements, the long-term maintenance plan, works planned for the next three years with estimated costs, known weathertightness or earthquake-prone issues, remediation reports from the last three years and an insurance summary.

You’re borrowing, not selling, so you won’t need all of it. Ask your body corporate manager (or the chair, in a small self-managed body corporate) for:

1. A levy statement showing your account is up to date.
2. The current long-term maintenance plan and its next review date.
3. The latest financial statements, showing what’s in the long-term maintenance fund.
4. The building insurance certificate — insurer, sum insured and excess.
5. Minutes from the last AGM and any recent committee meetings.
6. Any remediation, weathertightness or seismic reports the body corporate holds.

Many managers keep a ready-made pack because owners sell regularly. Ask for it by email the same hour you enquire. A manager who takes three days to reply is the single most common reason a unit title loan misses a same-day target.

Got the pack, or know you can get it today? Check your options in about a minute and mention it’s a unit title in the notes.

What changed for long-term maintenance plans, and why do lenders care?

The final provisions of the Unit Titles (Strengthening Body Corporate Governance and Other Matters) Amendment Act 2022 took effect on 9 May 2024, including a new long-term maintenance regime, according to HUD. Under it, Unit Title Services explains:

• every body corporate needs a long-term maintenance plan covering at least 10 years;
• large developments — 10 or more principal units — need a 30-year plan, with detailed costings for the first 10 years and high-level figures for years 11 to 30;
• large developments review the plan every three years, or sooner if something materially changes it;
• the body corporate decides how much sits in the fund, and the fund doesn’t have to cover every expected cost.

That last point is what a lender’s credit team reads closely. A 30-year plan showing a re-clad or roof replacement in year four, against a modest fund, tells them a special levy is likely. That doesn’t usually kill a loan, but it can trim the amount or prompt questions. Better you spot it first and explain it — for example, that the committee has already resolved to fund the works over several years.

What about leaky buildings and earthquake-prone notices?

These two issues take the most time to resolve, so raise them up front.

Weathertightness. A fully remediated building with a code compliance certificate for the repairs and a clear paper trail is often acceptable. A building with known leaks, an active claim or remediation not yet started is much harder. Some lenders decline, others lend at a lower ratio.

Earthquake-prone status. Search the address on the national earthquake-prone building register before you apply. If a notice exists, check the date on it: under 2024 changes, owners of buildings whose EPB notice deadline fell on or after 2 April 2024 received a four-year extension, and councils must re-issue those notices, building.govt.nz explains. A lender will want to know the new deadline and whether the strengthening is planned and funded.

If either issue applies, it may be faster to offer different security — another property, or a standalone house — and use the unit as additional support rather than the main security.

How fast can a unit title business loan realistically be funded?

With the papers ready, the timing looks a lot like any other property-secured loan. Same-day funding is possible for $20k to $250k on property security, and up to $5m is possible within 24–48 hours. Our aim is to have you funded within 24 hours of your first application. Here’s how a well-prepared day can run.

Time	What happens
9:00	You enquire and email the body corporate manager for the pack
10:00	A specialist calls, confirms the unit, the amount and your exit
11:30	The pack arrives; levy statement, insurance and maintenance plan are sent to the lender
13:00	Desktop valuation ordered; title checked
15:00	Approval issued; loan documents sent to your lawyer
Next morning	Documents signed, mortgage registered, funds released

(Illustrative only.) What stretches it: a body corporate manager who’s slow to reply, a lender wanting a registered valuation (common for apartments in large towers or unusual units), first-lender consent if your bank already holds a mortgage, or anything in the minutes that raises a question. Our page on property valuations and the list of what slows funding down cover those in more detail.

Is my car park on the same title?

Check this before you apply. Under the Unit Titles Act 2010, a car park, garage or storage space can be an accessory unit — designed for use with a principal unit and shown on the unit plan, as LINZ’s unit plan guidance describes. Usually it sits on the same Record of Title as your apartment. Sometimes, though, a car park is held on a separate title, or is just a licence or an exclusive-use right over common property.

Why it matters: an apartment with a car park is usually worth more than one without, and a valuer can only count what the lender’s mortgage covers. Pull your Record of Title (your lawyer can do it in minutes) and confirm the car park is included.

A worked example

A Hamilton physiotherapy clinic owner needs $85,000 to fit out a second treatment room before a new contract starts. Their bank won’t top up the home loan quickly, so they look at the two-bedroom townhouse they own in a 14-unit body corporate.

They email the manager at 8:45 am for the levy statement, insurance certificate, maintenance plan and AGM minutes. The pack arrives before lunch. The 30-year plan shows exterior repainting in year six, and the fund already covers most of it. No weathertightness issues, no EPB notice, and the double garage is an accessory unit on the same title. A desktop valuation is accepted and a second mortgage behind the bank settles the next day. (Illustrative only.)

The same loan with a missing insurance certificate and a manager on leave could easily have taken a week. Use the property equity estimator to rough out your own numbers before you start.

Ready to put your unit’s equity to work?

Plenty of lenders treat apartments and townhouses as awkward. We don’t — a unit title with tidy body corporate papers can be one of the quicker securities to work with. If you’ve got equity in one and a business need with a clock on it, let’s see what’s possible.

The enquiry takes about 60 seconds, and simply asking won’t touch your credit file — any credit check comes later, and only if you decide to go ahead. Your details stay with one specialist instead of being passed around a crowd of lenders, so your phone won’t light up with strangers. A real person reads what you’ve sent and calls to talk through the unit, the body corporate and the timing. Please fill the form in accurately — the unit type, rough value and what’s owing — so we can line up the right lender on the first try.

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