Selling in an Apartment Complex
Selling in an Apartment Complex | Reading Time: 6 Minutes | December 2020
What you need to know if you are Selling in an apartment complex
If you’re selling a home in a unit titled property - that is, if your property is in a development that has a body corporate you as the Vendor (or Seller) have additional legal obligations that don’t apply to any other type of title. This enables potential buyers to have access to important information at several key stages of the transaction. This information is to be provided in the form of disclosure statements, which have a compulsory form. There’s also some extra information that we recommend you provide if you want to maximise your chances of a smooth sale. Here’s what you need to know.
What do I need to disclose when selling in an apartment complex?
The Unit Titles Act 2010 sets out disclosure requirements for the sale of unit titled properties: Pre-Contract Disclosure Statements; Pre-Settlement Disclosure Statements and Additional Disclosure Statements (where requested).
The disclosure statements were introduced to inform buyers about the role and responsibilities of the body corporate, the property’s financial status and the buyer’s rights and responsibilities. That’s the theory. In practice, buyers need a lot more than just the prescribed information, but the legal basics are a good start point.
The vendor must supply formal disclosures to buyers at three separate stages of the transaction:
- Before any sale and purchase agreement is signed (Pre-Contract Disclosure Statement – as prescribed by s146 of the Unit Titles Act 2010)
- Before the settlement date (Pre-Settlement Disclosure Statement – as prescribed by s147 of the Unit Titles Act 2010)
- If additional disclosure is specifically requested by the buyer (Additional Disclosure Statement – see s148 of the Unit Titles Act 2010)
Pre-contract disclosure statement
Every owner in a Body Corporate must have a Pre-Contract Disclosure Statement in order to sell their property. This statement provides prospective buyers with basic information about the unit and the development.
The seller must provide this statement at the time they enter into a listing agreement with an agent. The pre-contract disclosure statement contains general information about unit title ownership, as well as specific details such as the body corporate levies, upcoming maintenance to the development, funds held by the body corporate, and whether the unit or common property has had any weather-tightness problems.
This statement is to be provided in a standard format and the owner can prepare and provide this. A template can be found here. If you are a client of Crockers Body Corporate Management, most of the information you require can be found in your My Community portal. Alternatively, you can pay for the statement to be prepared for you, at an extra cost.
Pre-settlement disclosure statement
The seller must provide this statement after entering into an unconditional agreement for sale and purchase, by no later than the fifth working day before the settlement date.
This statement is usually organised through your solicitor with its purpose being to give the buyer a summary of the current fees and charges relating to the unit, whether there are any proceedings pending against the body corporate and whether there have been any changes to the body corporate operational rules.
This comes in two parts, the statement and then a certificate. The statement must be signed by the owner and the certificate by the body corporate.
Additional disclosure statement
The seller provides this statement at the request of the buyer and the buyer must pay all reasonable costs associated with providing it to the seller. The purpose of the additional disclosure statement is to make body corporate records on maintenance, finances, insurance, contracting and governance accessible to potential buyers.
A buyer can request an additional disclosure statement at any time before the earlier of the close of the fifth working day after the date the agreement for sale and purchase was entered, or the tenth working day before the settlement date.
If a buyer makes a request, the seller must provide the additional disclosure statement to the buyer within five working days of receiving the request.
In practice, a savvy buyer will ask to see a lot of this information before signing a Sale & Purchase Agreement, or even before making an offer. That’s because the meeting minutes, financial accounts, budgets and long term maintenance plan provide great insights into a body corporate, the status of the building and the engagement of owners in the long term value of their complex. If that information isn’t available, would-be buyers may move on to a property where they have greater early disclosure. To maximise your chances of a smooth sale process, consider providing recent minutes, financials and the long term maintenance plan in the pre-contract phase. All of this information will have been provided to you by your secretary, and / or be available in MyCommunity. Fees may apply if you ask your body corporate manager for additional copies of documents that have previously been provided.
What if I live in another type of community titled entity?
There are a number of apartment complexes which are not unit titled – they’re cross leases, or company titles, or perhaps fee simple titles with Resident’s / Laneway Societies attached and embedded in encumbrances on the title. A lot of these entities appoint Crockers to manage their affairs, just as a body corporate might.
The Unit Titles Act doesn’t apply to these entities, so you don’t have to comply with the disclosure regime described above. You do need to provide a Certificate of Levies when you sell so the new owner has confirmation of the balance of costs outstanding when they purchase). You also need to make sure that your real estate agent understands the structure you’re part of in your apartment or complex, and that they communicate that to your would-be purchasers. We’ll talk more about that in another, later blog.
How can Crockers help?
Every owner in a Body Corporate must have a s146 Pre-Contract Disclosure Statement in order to sell their property. To take some of the stress away at what is a busy time, Crockers can prepare this statement for you at a cost of $295 + GST.
Our Crockers Realty team are well versed in the complexities of selling unit titled and other community titled properties. As a thank you to our valued clients, if clients of Crockers Body Corporate choose to sell their property with Crockers Realty, we will provide the s146 document free of charge. The same offer applies if you’re in another form of community titled entity – if you list with Crockers Realty, your Certificate of Levies will be provided free.
If you are looking to sell your unit titled property and would like to learn more about this offer, or have any further questions on preparing your unit titled property for sale, contact Naomi on firstname.lastname@example.org.