Make sure your disclosure statement is correct so complies with requirements or your Buyer can terminate the contract at any time before settlement.
If you are selling a residential unit or apartment with a body corporate structure, you must provide the buyer with a compliant Disclosure Statement before the Buyer enters into the Contract of Sale (section 206 of the Body Corporate and Community Management Act 1997 (Qld) (“BCCM Act”)).
The Disclosure Statement must contain certain information and failing to provide the Disclosure Statement to the Buyer may give the Buyer the right to terminate the Contract among other things.
Requirements for a Disclosure Statement
The Disclosure Statement will generally be prepared by your Body Corporate Manager.
There is no standard form, so they can all appear in different forms.
However, the Disclosure Statement must contain:
- the name, address and contact telephone number for the Body Corporate Secretary or Body Corporate Manager if it is responsible for issuing information certificates;
- state the amount of the annual contributions (eg Administration, Sinking and Insurance Fund Levies) payable by the owner of the lot;
- identify improvements on common property for which the owner is responsible;
- a list the assets of the Body Corporate required to be recorded on the register;
- whether there is a body corporate committee or the Body Corporate Manager is engaged to perform the functions of a committee; and
- include other information prescribed under the regulation module applying to the scheme.
Additionally, the disclosure statement must also be signed by the Seller and be substantially complete at the time it is given to the Buyer (before signing of the Contract).
Statutory Warranties – Be VERY careful
Sellers must disclose to buyers certain defects and liabilities.
Certain warranties are implied into a contract of sale under s223 of the BCCM Act. These include:
- any patent or latent defects in the common property (including exclusive use areas) or body corporate assets (e.g. substantial building defects that require repair – e.g. concrete cancer, structural or water issues, combustible cladding on the building);
- any actual or contingent or expected liabilities of the body corporate not part of the body corporate’s normal operating expenses (e.g. significant debts or judgments or other liabilities that may result in a special levy); and
- anything else a Seller is aware of regarding the body corporate’s affairs which may affect the Buyer.
If any of the above exist and are not disclosed to the Buyer within the Disclosure Statement before entering into the Contract, the Buyer may have a right to terminate the Contract and or may have a right to compensation for any loss the Buyer suffers or incurs as a result of the breach of warranty.
Getting it Right
To get it right we suggest a seller:
- Get a full search of the Body Corporate Records; and
- Seek assistance from a property lawyer to ensure the accuracy and completeness of the Disclosure Statement.
Where to from here?
If you are a selling a unit or apartment, contact Pacific Law to obtain advice about your particular situation. Give us a call at (07) 5443 4744 or email us at firstname.lastname@example.org.