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Introducing New Disclosure Regime
As part of new provisions of the Unit Titles (Strengthening Body Corporate Governance & Other Matters) Amendment Act, a new disclosure regime has come into effect from 9 May 2023, including more comprehensive disclosure requirements in a pre-contract disclosure statement and a pre-settlement disclosure statement. We take a closer look.
What is a Section 146 – Pre-Contract Disclosure Statement?
A Section 146 – Pre-Contract Disclosure Statement (S146) is a document that an owner must provide when selling their unit in a body corporate.
How Does the Unit Titles (Strengthening Body Corporate Governance & Other Matters) Amendment Act Affect Disclosure Statements?
Purchasing a property within a body corporate comes with a number of financial commitments and other matters that need consideration that a purchaser wouldn't ordinarily be required when purchasing a standalone house.
Examples of matters that a prospective purchaser will need to consider when buying into a body corporate as opposed to purchasing a standalone house are:
- A body corporate has operational rules that all owners are required to adhere to
- There will be common property maintenance that all owners are required to contribute to financially
- Understanding the financial reports that are kept for the body corporate
- Understanding what a utility interest is and how this affects your financial contribution to body corporate operating expenses and/or long-term maintenance needs.
The Unit Titles (Strengthening Body Corporate Governance & Other Matters) Amendment Act (UTAA) seeks to provide potential purchasers with an increased amount of important information than was originally required under the Unit Titles Act 2010, to further enhance a prospective purchaser's ability to make an informed decision to purchase a property within a body corporate.
What Additional Information Must be Included in a Disclosure Statement from 9 May 2023?
Some of the additional information required includes:
- The previous 3 years' worth of financial reports, general meeting minutes and committee meeting minutes
- Specific details regarding weather-tightness claims
- Specific details regarding current and/or pending legal action being taken against the body corporate.
The requirement to provide this additional information will mean it will take longer to complete an S146 draft. Consequently, the increased time taken to draft an S146 will result in an added cost to the owner when requesting that an S146 be prepared.
What is a Section 147 – Pre-Settlement Disclosure Statement?
A Section 147 - Pre-settlement Disclosure Statement (S147) applies if a buyer and a seller have entered into an agreement for sale and purchase. No later than the fifth working day before the settlement date, the seller must provide an S147 to the buyer.
Your Questions Answered
The Unit Titles (Strengthening Body Corporate Governance and Other Matters) Amendment Act 2022 was passed into law on 9 May 2022. The object of the Act was to enhance safeguards for individuals who purchase or possess unit title properties.
Provisions of the Act have come into effect in stages: Provisions to support remote attendance at meetings came into force on 9 December 2022; most provisions have come into force this month from 9 May 2023; and additional revisions that need more time to implement will come into force on 9 May 2024.
For more context watch our Unit Titles Amendment Act: Understanding the Changes webinar, or contact Crockers’ Community Living experts at 09 968 3311 or email firstname.lastname@example.org