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15 Apr 11
Important changes to disclosure requirements for sellers of units

The Body Corporate and Community Management and Other Legislation Act 2011 (Act) received royal assent on 14 April 2011.

The Act amends, amongst other things, disclosure requirements for sellers of units or other community title scheme (Scheme) lots and will apply to both contracts issued after the commencement date (14 April 2011) and also to contracts given to a proposed buyer but not yet signed by both parties.

The new obligations for sellers

On and from 14 April 2011 a seller of an existing lot in a Scheme must:

  • give a buyer a full copy of the registered community management statement (CMS) as part of pre-contract disclosure, and
  • if a new CMS is recorded after the contract date, give the buyer a copy of the new CMS within 14 days of any new CMS being recorded.

A buyer now has a statutory right to terminate the contract within 14 days if the buyer would be materially prejudiced by changes made to the CMS since last disclosed to the buyer.

Disclosure statements for sales of both existing and off-the-plan lots must now also state:

  • the extent to which annual contributions are, or will be based on each of:
    • the contribution schedule lot entitlements, and
    • the interest schedule lot entitlements
  • the contribution and interest schedule lot entitlements are set out in the CMS for the Scheme.

Additional termination rights have been given to buyers from developers (both if selling off the plan or an existing lot) notwithstanding proper pre-disclosure has otherwise been given. A buyer may terminate at any time before the earlier of:

  • settlement, or
  • 30 days after receipt of the signed contract

where the buyer reasonably believes that the contribution schedule lot entitlements for the Scheme contained in the CMS disclosed to the buyer pre-contract are inconsistent with the relevant principle and explanation of lot entitlements required to be contained in the CMS and the buyer will be materially prejudiced if compelled to complete the contract.

Any contracts issued to buyers on or before 14 April 2011 under the old disclosure regime but not yet signed by the seller may, in some instances, need to be reissued to ensure compliance with the new disclosure requirements.

Any lot-owners and developers in the process of selling a lot in an existing or proposed Scheme should seek legal advice on the impact of the new disclosure requirements on the sale of their property.

Further information

For further assistance or enquiries please contact:

Ian Hazzard on 07 3233 8976
Andrew Muir on 07 3233 8836.

Focus covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. Focus is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.

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