Buying a Townhouse or Unit
Body Corporate Disclosure
When you are purchasing a residential unit or apartment in a building complex (or more particularly, a lot in a community titles scheme), the Seller must provide a disclosure statement to the Buyer (before the Buyer enters into the contract of sale) which contains certain information required to be disclosed by the Seller under section 206 of the Body Corporate and Community Management Act 1997 (Qld) (‘BCCM Act’).
The standard contract usually used for these transactions is known as the ‘REIQ Contract for Residential Lots in a Community Titles Scheme (10th Ed)’ (‘Contract of Sale’). The purpose of the disclosure statement is to give the Buyer some material information about the responsibilities and liabilities that the Buyer will be required to assume as a member of the body corporate once the Buyer becomes the owner of the residential lot in the community titles scheme.
In essence, the disclosure statement is required to contain the following information in accordance with section 206 of the BCCM Act:
- state the name, address and contact telephone number for:
- the following:
- if the scheme is a specified two-lot scheme (for example, a duplex), each person who is responsible for keeping body corporate records under the specified two-lot schemes module;
- otherwise, the secretary of the body corporate;
- if it is the duty of a body corporate manager to act for the body corporate for issuing body corporate information certificates, then, the body corporate manager (and it is not unusual for a body corporate manager to be engaged by a body corporate to assist it with various administrative duties);
- state the amount of annual contributions currently fixed by the body corporate as payable by the owner of the lot;
- identify improvement on common property for which the owner is responsible;
- list the following:
- if the scheme is a specified two-lot scheme – the body corporate assets of more than $1,000 in value;
- otherwise, the body corporate assets required to be recorded on a register the body corporate keeps;
- state whether there is a committee for the body corporate or a 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 (and there are currently five (5) regulation modules in Queensland, including the Standard Module, Accommodation Module, Commercial Module, Small Schemes Module and the Specified Two-lot Scheme Module).
Additionally, the disclosure statement must also be signed by the Seller and be substantially complete at the time it is given to the Buyer. The information contained in the disclosure statement can be technical and difficult to interpret at times, but having a proper understanding of the disclosure statement is essential for a Buyer concerned to know about the extent of some of his or her responsibilities under the community titles scheme (for example, understanding the extent of the Buyer’s liabilities for annual contributions towards the administrative and sinking funds maintained by the body corporate, or about any specific improvements to the common property for which the Buyer may be responsible).
Seeking the assistance of a conveyancing lawyer in understanding the disclosure statement is advisable, especially if the Buyer has concerns about the accuracy or completeness of the disclosure statement, in which case the Buyer may be entitled to certain termination rights provided the Buyer exercises said rights in accordance with any applicable requirements and time frames imposed by the BCCM Act (or as the case may be).
This commentary is of a general nature only, containing nothing more than some general information for the reader. It is not intended to be legal advice, nor cannot it be relied upon as legal advice. To this end, please read our Website Terms including the disclaimer contained therein carefully. Laws, rules and principles may be subject to sudden and unexpected changes and you should always consult a lawyer about your specific circumstances.