Are you looking at buying or selling an apartment? If so, there are key provisions of the Unit Titles for information disclosure which you need to be aware of. Note: these rules cannot be contracted out of if and when you decide to sell up and move on.
Unlike your average property transaction, there are further steps that need to be considered when selling a unit title. In order to ensure there are no hold ups, it is important to consider the disclosure requirements early on.
The disclosure provisions are split into three parts as follows:
1. Pre-Contract Disclosure
Before entering into an agreement for the sale of your unit, the seller must provide the purchaser with the ‘pre-contract disclosure statement’, which sets out the following:
An explanation of:
what a unit title property ownership is and unit title plans;
what ownership and utility interests are;
body corporate rules and operational rules;
information regarding the pre-settlement disclosure statement, additional disclosure statement including any costs in obtaining this;
titles, easements and covenants; and
land information memorandum (LIM) and how to get this.
The current body corporate levy including the period that it covers;
Any maintenance that the body corporate propose for the year and how the costs are to be met;
The balance of the body corporate bank accounts (at the date of the last financial statements);
Whether the unit in question or any common property has been subject to a weather tightness claim;
If your apartment has a body corporate manager, you will need to contact the body corporate management company and inform them that you are selling the property and require a pre-contract disclosure statement.
2. Additional Disclosure
There is no requirement to provide additional disclosure unless requested by the purchaser. The Purchaser may request an additional disclosure statement. This request must be made before the close of the fifth working day following signing the agreement or the tenth working day before settlement (whichever comes first).
The seller must supply the additional disclosure statement within 5 working days following the request being made. It must include:
The contact details for the body corporate and the committee;
The current balances of the bank accounts held as at the last financial statements;
Any amounts owed by the body corporate as at the date of the request;
Information relating to regular expenses;
Details of the insurance held by the body corporate;
Any contacts that the body corporate has entered into and the details of those contacts;
Long term maintenance planned, carried out in the last year, whether there is a fund (if so the levies/whether current funds are sufficient to met any planned maintenance);
Any amendments to the body corporate rules; and
Any text of motions from the last general meeting.
Because this is only carried out at the request of the potential purchaser, the purchaser is responsible for meeting the seller’s costs in obtaining this information. Again, the body corporate management company will provide this information and a rough estimate of costs for this between $450 – $750.
It’s important however to note that the non-payment of the purchaser does not justify the seller withholding the additional disclosure.
3. Pre-Settlement Disclosure
No later than the fifth working day before settlement date, a pre-settlement and accompanying insurance certificate are to be provided to the purchaser. This includes that following:
the unit title and body corporate number;
the body corporate levies, the period covered, manner of payment and when these are due;
Whether any levy is currently unpaid, if so, the amount and whether there are any legal proceedings commenced in relation to the unpaid levies;
rate of interest on unpaid levies;
Any costs relating to repair of building elements or infrastructure contained in the unit are unpaid, if so, the amount unpaid;
any proceedings that are pending against the body corporate; and
whether there have been any changes in the body corporate rules since the pre-contract disclosure statement.
The body corporate must include a certificate certifying that the information is correct.
As noted above, the sale and purchase agreement includes a clause that provides that the deposit should be held until the additional disclosure and pre-settlement disclosure have been provided to the purchaser. There may as a consequence be a delay in the release of the deposit which may impact on any further property purchases.
There’s a lot to consider and we recommend sellers ensure they do their homework. To find out more, get in touch with our property team