In an earlier Heads Up article, I explained that when the new Unit Titles Act 2010 came into force, a seller was going to have to give a prospective buyer, and an actual buyer, disclosure statements containing certain information. The Government was to draft regulations setting out what information would have to be given.
Those regulations were published last week, and will come into force on 20 June 2011, at the same time as the new Act.
Under the new Act and regulations, a seller will have to give a prospective buyer or buyer the information set out below.
Pre Contract Disclosure Statements
Before a buyer signs a sale and purchase agreement for a unit title property, the seller must give the buyer a “pre contract disclosure statement”.
The second schedule to the regulations contains the form of pre contract disclosure statement that must be used. The disclosure statement must include the following information:
a) Details (amount and period covered) of the body corporate levy for the unit;
b) Details of any maintenance which the body corporate intends to carry out in the year following the date of the disclosure statement, and how the body corporate is to pay for the cost of the maintenance;
c) The balance of every fund or bank account operated by the body corporate as at the date of the last financial statement;
d) Whether the unit or the body corporate is, or has been, the subject of a claim under the Watertight Homes Resolution Services Act 2006, or any other Court proceedings involving water leak issues;
e) An explanation of the unit title property ownership, unit plans, ownership and utility interests, body corporate operational rules, land information memorandum, and easements and covenants, and advice about how to obtain further information about these matters.
f) An estimate of the cost of providing an additional disclosure statement
Pre Settlement Disclosure Statements
After the sale and purchase agreement is signed, the seller must give to the buyer a pre settlement disclosure statement at least five working days before settlement.
There is no prescribed form, but the statement must contain the following information:
a) Unit number;
b) Body corporate number;
c) The amount of the body corporate levies in the period covered by the levy;
d) How the levy is paid;
e) The due date for payment of the levy;
f) Whether or not the levy has been paid, and how much is still owing;
g) Whether legal proceedings have been started to recover any unpaid levy;
h) Whether any metered charges owing to the body corporate are unpaid, and the amount of any unpaid charges;
i) Whether any money is owing for by the unit owner for repairs for the unit or services, and the amount unpaid;
j) Details of any interest being charged for any unpaid amounts;
k) Whether any Court or Tribunal proceedings have been brought against the body corporate;
l) Details of any changes to the body corporate operational rules.
Additional Disclosure Statement
A buyer may also request an additional disclosure statement within certain time periods. If an additional disclosure statement is requested, the seller must supply it within five days. The buyer must pay the costs of providing the additional statements, but the seller cannot withhold the statement until the costs are paid.
The additional disclosure statement must contain the following information:
a) Contact details for the body corporate and body corporate committee;
b) The balance of every fund or bank account held or operated by the body corporate;
c) Any amount owing by the body corporate under invoices as at the date that the request for the additional disclosure statement is made;
d) Details of regular expenses that are incurred at least once a year;
e) Any amounts owed to the body corporate at the date the additional disclosure statement is requested;
f) Certain details of every current insurance policy held by the body corporate;
g) Certain details of every current contract entered into by the body corporate;
h) Details of any lease which the base land is subject to;
i) Copies of any motions voted on at the last general meeting, and whether the motion was passed or not;
j) Whether the body corporate operational rules are different from the standard body corporate operational rules;
k) A summary of the long term maintenance plan, including details of maintenance to be carried out in the future or during the last year, and whether there is a long term maintenance fund, and details of that fund.
What it means for you
Now that the regulations have been issued, a new edition of the standard sale and purchase agreement is likely to be issued soon containing changes to take account of the new Act and regulations.
As agents, you will have to obtain a pre contract disclosure statement from the seller when you list the property, and give it to any buyer who wishes to make an offer before the offer is made. You should have the buyer sign an acknowledgement that he/she has received a copy.
The lawyers will be responsible for giving the additional disclosure statement and the pre-settlement disclosure statement, but you may want to think about changing your listing authority to say that commission is still payable if the agreement is otherwise unconditional and the buyer cancels because a disclosure statement is not provided.
Some buyers may want to include an additional condition in the agreement, making the purchase conditional on their being satisfied with an additional disclosure statement to be provided by the seller.
Disclaimer: This information is correct at time of publication, designed as a general guide and should not replace specific legal advice on a particular issue.
