SELLERS’ DISCLOSURE REQUIREMENTS IN QUEENSLAND FOR PROPERTIES WITHIN A BODY CORPORATE
Where you are selling a property in a community titles scheme (e.g. an apartment or townhouse), it is crucial that you provide disclosure regarding the body corporate information to the buyer.
Along with providing a signed and substantially complete Disclosure Statement to a buyer before the contract is signed, the seller also gives a number of statutory warranties, unless expressly noted otherwise in the contract.
What do you need to disclose in relation to the statutory warranties?
Under section 223 of the Body Corporate and Community Management Act (“BCCM Act”) a seller warrants that:
As at the date of the contract:
- To the seller’s knowledge there are no latent or patent defects in the common property or body corporate assets, other than defects arising through fair wear and tear and defects disclosed in the contract;
- The body corporate records do not disclose any defects in the common property or body corporate assets other than those arising through fair wear and tear or disclosed in the contract;
- To the seller’s knowledge there are no actual, contingent or expected liabilities of the body corporate that are not part of the body corporate’s normal operating expenses other than those disclosed in the contract;
- The body corporate records do not disclose any actual, contingent or expected liabilities other than those which are part of its normal operating expenses or disclosed in the contract; and
As at the date of settlement:
- To the seller’s knowledge, there are no circumstances other than those disclosed in the contract in relation to the affairs of the body corporate likely to materially prejudice the buyer.
These warranties cover information that is not included in the Disclosure Statement. As such, when an agent or seller is completing the Statutory Warranties and Contractual Rights sections in the contract, it is not sufficient to say “refer to the disclosure statement”. Instead, these sections should be fully completed.
What are the implications if you don’t disclose an issue related to a statutory warranty?
If the seller breaches a statutory warranty, the buyer may terminate the contract within 14 days of receiving the contract for an existing lot, or no later than 3 days before settlement for a proposed lot. The deposit would also be returned to the buyer.
As such, to ensure your transaction proceeds smoothly, it’s important to provide full disclosure before the contract is signed.
