Selling a Unit or Townhouse? What you must Disclose to the Buyer Before Signing a Contract

When selling a unit or a townhouse a seller has an obligation to disclose to potential buyers’ body corporate information before a contract is entered into. Failing to provide the information, or providing incorrect information, risks the contract being terminated.

What information needs to be included in the Disclosure Statement

The Body Corporate and Community Management Act 1997 (Qld)provides what is required to be included in a Disclosure Statement, which is:

• The contact details (name, address and telephone number) for the secretary and manager of the body corporate or the person who keeps the body corporate records (if a two-lot scheme modules);
• The amount of annual contributions fixed by the body corporate payable for the lot (includes administrative, sinking and insurance funds);
• Improvements on common property that the owner of the lot is responsible for;
• The body corporate assets required to be recorded on a register the body corporate keeps;
• Whether there is a body corporate committee or whether the body corporate manager performs the functions of a committee; and
• Any other information prescribed under the regulation module applying to the scheme.

When must the Disclosure Statement be provided to a Buyer

The Disclosure Statement must be provided to a buyer before signing the contract. The seller must have signed the Disclosure Statement before providing it to the buyer and it must be substantially completed. The information outlined above must be entered to the best of the seller’s and body corporate’s knowledge.

If the seller fails to provide the buyer with a Disclosure Statement:

• With the required information completed;
• Signed by the seller; and/or
• Given after the buyer signs the contract,

then the buyer may terminate the contract so long as settlement has not yet been effected.

What if the information in the Disclosure Statement is Inaccurate?

If the information provided in the Disclosure Statement is inaccurate, the seller has still satisfied its duty to provide the buyer with a disclosure statement before entering into a contract for the property.

The buyer can terminate the contract if the:

• Inaccurate information was provided when the contract was entered into; and
• The buyer would be materially prejudiced if they were forced to complete the contract or the buyer has made reasonable efforts to verify the information in the disclosure statement but has not been able to verify it.

The buyer can terminate the contract before settlement has been effected, and they must give the seller written notice of termination within 14 days after receiving the signed contract. In the event the contract is terminated because of the inaccuracy of the Disclosure Statement, then the seller must refund the buyer any amount it has paid under the contract (for example payment of a deposit) within 14 days of termination.

 

If you have any questions or require assistance with a body corporate or conveyancing matter in Queensland, please contact the property team at NB Lawyers for more information.