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11 December, 2013 | Smith and Partners
The main thing that agents need to know if they are marketing a unit title property is that there are three stages where information about the property (disclosure) must be given to prospective purchasers, or can be required by a purchaser or prospective purchasers.
The disclosure must be in writing, dated and signed by the vendor or a person authorised by the vendor (if you are signing as authorised signatory you should make sure you have the written authority of the vendor).
If you are signing a pre-contract disclosure statement as authorised agent you should check your terms of engagement and whether you want to be doing this and perhaps exclude any obligation to ensure the disclosure statement is correct.
If you are marketing a unit title property, it is best to discuss the disclosure requirements with the vendor at your initial meeting so that they are aware of the costs involved and so you can set up a plan for how you will get the information in time for each stage.
It is also important to note that the ADLS/REINZ Agreement for Sale and Purchase incorporates these compulsory provisions of the Act in clauses 2.4, 3.16, 6.4(4), 8.1-8.6 and you cannot contract out of them. Deleting or amending these clauses will have no affect.
A pre-contract disclosure statement must be provided before the agreement for sale and purchase is signed, and provided in the form set out in the Unit Title regulations.
Vendors will need to contact their body corporate management company to let them know they are selling their property and that they require a pre-contract disclosure statement so that their real estate agent can provide it to prospective purchasers.
The costs of the pre-contract disclosure statement are to be met by the vendor. If requesting a pre-contract disclosure statement from a body corporate management company then the vendor can expect to pay between $250-$350 for it.
There are no consequences in the Act for not providing a pre-contract disclosure statement. However this could be tested in the courts if the purchaser can show that they would not have entered into the contract if they had received that information.
Unlike the pre-contract disclosure statement, there is no requirement to provide an additional disclosure statement unless a potential purchase requests it. The purchaser must request an additional disclosure statement within 5 working days of signing the sale and purchase agreement or 10 or more working days before settlement date – whichever date is earlier. The request does not have to be in writing. The vendor has five working days from the date of the request to supply the additional disclosure statement.
There is no prescribed form but the additional disclosure statement must include certain information which is set out in Reg 35 of the Act including:
Again the body corporate administration company will be able to provide the information. They will charge between $450 – $750 for it.
The purchaser is to pay for the additional disclosure statement if they request it, however if the purchaser does not pay the vendor still has to provide it. The vendor could then add this charge in the settlement statement. This is set out in clause 8.5 of the agreement for sale and purchase.
The pre-settlement disclosure statement and certificate of insurance are to be provided by the vendor (or the vendor’s agent) to the purchaser not less than 5 working days before the settlement date. The agreement can still be unconditional when this information is provided.
Again there is no prescribed form however the pre-settlement disclosure statement must include certain information which is set out in Regulation 34 and includes:
You should be aware clause 2.4(3) of the agreement for sale and purchase provides that the deposit should be held until an additional disclosure statement and a pre-disclosure statement have been provided to the purchaser within the time frames or such extension of time as was agreed. This may cause delays to release of the deposit, and if they are not provided, the agreement can be cancelled.
The cost of a pre-settlement disclosure statement is generally between $250-$350.
The purchaser can, by notice in writing to the vendor, delay the settlement date to the date that is five working days after the information is provided or, the purchaser could, by notice in writing to the vendor, cancel the agreement.
What if there is no body corporate management company? The vendor should contact whoever has been looking after the insurance on the units to see if they will provide one, otherwise the vendor can check with their solicitor.
Make sure your vendor has the pre-contract disclosure statement from the body corporate management company and provides this to you at the time of the listing. If the property is going to auction then it should be provided with the auction pack.
As a purchaser only has 5 working days after the date of the agreement to request an additional disclosure statement you should ensure the agreement is provided to the vendor’s solicitor as soon as possible after signing.
Calculate the dates conditions are due to ensure that the agreement does not still have conditions due at the time the vendor is required to provide the pre settlement disclosure statement to the purchaser. Otherwise, this could put the vendor to unnecessary expense in having to provide it and then the purchaser does not satisfy the condition. This should also be taken into account when condition dates get extended (if the settlement date isn’t also being extended).
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