The Body Corporate and Community Management and Other Legislation Amendment Act 2010 (Qld) was passed on 6 April 2011 and will commence on a date to be set (but expected shortly).
The changes to the disclosure regime under the Body Corporate and Community Management Act 1997 (Qld) (BCCM Act) will apply to both contracts issued after the commencement date and also to contracts already given to a proposed buyer but not yet signed by both parties.
New disclosure obligations for sellers
Sellers will need to provide additional disclosure when entering into a contract for the sale of both existing and proposed community titled properties to which the BCCM Act applies. Failure to provide this additional disclosure before the buyer signs the contract, may give the buyer a right to terminate the contract at any time prior to settlement.
For an existing lot, a copy of the Community Management Statement (CMS) must now be given with the disclosure statement before the buyer signs the contract.
For both existing and proposed lots, the new disclosure statement must include four new statements outlining:
- the amount of annual contributions fixed by the body corporate as payable by the owner of the lot (this was previously required, but now further detail is required – see statements 2 to 4);
- the extent to which the amount in statement 1 is based on the contribution schedule lot entitlements for lots in the scheme;
- the extent to which the amount in statement 1 is based on the interest schedule lot entitlements for lots in the scheme; and
- that the contribution schedule lot entitlements and the interest schedule lot entitlements are set out in the CMS.
Contracts already given to a buyer but not yet signed by both parties
If, when the new laws come into effect, a contract for a community titled lot has been given to a proposed buyer but has not signed by both parties, then, before the buyer signs the contract, the seller must provide the buyer with:
- a new disclosure statement incorporating the four new statements (listed above) and a copy of the CMS; or
- if a disclosure statement has already been provided to the buyer, a written notice that includes the four new statements and a copy of the CMS.
For an existing lot, if a new CMS is recorded after the disclosure statement is given but before the contract settles, the seller must give the buyer a copy of the new CMS within 14 days. A buyer can cancel a contract prior to settlement if the buyer would be materially prejudiced, given the extent of any changes.
For a proposed lot, if changes are made to the proposed CMS, the seller is obliged to give a further statement in the manner prescribed by section 214 within 14 days.
What actions should a seller take until the new changes commence?
If, prior to commencement of the changes, a contract for a community titled lot has been signed by the buyer but not by the seller, we recommend that a new disclosure statement (complying with the above requirements) and associated documents (e.g. direction) be issued to the buyer for signing.
All disclosure statements need to be updated to comply with these new requirements.
Even though the changes have not yet commenced, a seller should consider incorporating the additional requirements as a precaution, given that the inclusion of additional information will still comply with the current laws.
A new Form 14 Body Corporate Information Sheet (which must be attached to contracts for community titled properties) will be prescribed in due course but, until that occurs, the current Form 14 should continue to be used.