Residents’ societies have long offered a flexible way to manage shared infrastructure in residential developments. However, following the 5 April 2026 re-registration deadline under the Incorporated Societies Act 2022, incorporated societies are now facing a shift toward greater regulation and accountability.
Residents’ societies are typically established as incorporated societies, allowing property owners in a development to collectively manage shared assets such as driveways and common areas. As separate legal entities, they can own property and enter contracts in their own name. A land covenant or encumbrance is usually registered against the title to each property in the development requiring the owner and any subsequent owner of the property to be members of the residents’ society. Historically, they operated under the Incorporated Societies Act 1908, which imposed relatively minimal governance requirements and allowed for a more informal, flexible approach. The 1908 Act has now been replaced by the 2022 Act.
Structure and accountability requirements
Residents’ societies are now required to adopt constitutions that set out how they operate, including governance processes, dispute resolution mechanisms, and financial management. In addition, annual returns must be completed, which involve reviewing, updating, and confirming key information to demonstrate that the society is continuing to operate lawfully.
Officer duties
In the past, committees and officers were not formally defined; now, they have explicit legislative duties and responsibilities to uphold. The officers who run the residents’ society, are now subject to clear statutory duties under the 2022 Act. These duties reflect a move toward more formal governance, similar to the obligations imposed on company directors, to:
- Act in the best interests of the society,
- Exercise powers for proper purposes only,
- Comply with the constitution and the law,
- Exercise reasonable care and diligence in decision-making,
- Not create a substantial risk of serious loss to creditors, and
- Not incur an obligation the officer does not reasonably believe the society can perform.
For residents’ societies, this means that committee roles now carry genuine responsibility.
Decisions about levies, maintenance of shared assets, dispute resolution and enforcement of community rules must be made carefully and in accordance with proper processes.
Running a residents’ society is therefore no longer a casual role, as it may have been under the previous structure, but one that requires a more disciplined and focussed approach.
Society assets and winding up
The treatment of a society’s assets on winding up has changed substantially from the 1908 Act, which allowed surplus assets to be distributed to members if the constitution permitted it. Under the 2022 Act, members cannot hold any legal interest in society property and, as a result, surplus assets cannot be returned to members upon dissolution.
Instead, surplus assets must be transferred to a not-for-profit entity despite the fact that property owners within the residents’ society may have contributed to the acquisition and/or upkeep of those assets through residents’ society levies.
This unintended outcome drew criticism from both the New Zealand Law Society Property Law Section and the Law Association of New Zealand, leading to temporary exemptions for residents’ societies in 2025. The 2025 Amendment Regulations grant an extension until 5 October 2028, allowing residential societies to distribute shared assets upon dissolution if it was permitted by their rules under the 1908 Act.
While this provides temporary relief, primarily aimed to facilitate the re-registration of residential societies under the 2022 Act, it does not resolve the underlying issue beyond 2028, and further consideration is needed as to what will happen after this transitional period. It may be that incorporated societies will no longer be a suitable structure for some residents’ societies.
Although the reform aims to prevent societies from operating for private financial gain, the context of residential societies is materially different from that of organisations such as sports clubs. Residential societies consist of property-owning members who have typically funded shared infrastructure over time and may reasonably expect to benefit from it.
Key takeaways
Residents’ societies are no longer informal and flexible structures. They now carry real governance responsibilities. The 2022 Act also highlights an underlying mismatch between the needs of traditional societies and modern residential development societies. While the transitional rules offer short‑term relief, it may be useful for developers to consider whether alternative ways of managing shared infrastructures will be more fit for purpose.
Hesketh Henry regularly assists property developers, investors, purchasers, vendors and owners. If you have any questions relating to property please get in touch with your usual contact from our Commercial Property Team.
Disclaimer: The information contained in this article is current at the date of publishing and is of a general nature. It should be used as a guide only and not as a substitute for obtaining legal advice. Specific legal advice should be sought where required.
