When a lot is sold as part of a community titles scheme (scheme), the seller must disclose certain matters to a buyer, including for example, the annual contributions payable by the owner of the lot.
It has come to light, that despite these disclosures many buyers do not consider this information prior to making a purchase and therefore are not making fully informed decisions in respect of the purchase. There is also evidence to suggest that buyers are not aware that lot entitlements may be adjusted. In some cases this has led to buyers having to pay higher levies after a contribution schedule lot entitlement adjustment order, which is money they had not accounted for.
The Body Corporate and Community Management and Other Legislation Amendment Act 2010 (Qld) (BCCM Amendment Act) was passed on 6 April 2011. The BCCM Amendment Act amends the Body Corporate and Community Management Act 1997 (Qld) (“BCCM Act”) in an attempt to address these issues by enforcing further obligations on a seller in relation to a seller’s disclosure requirements for land under a scheme.
Extra requirements on a seller
In order to resolve these issues and to allow buyers to be better informed in their decision to purchase a lot in a scheme, the BCCM Amendment Act places further requirements on a seller including:
- Requiring the community management statement to be provided to the buyer with the disclosure statement lot prior to the buyer signing the Contract for existing lots.
In relation to existing lots and proposed lots requiring the disclosure statement to include:
- the amount of annual contributions currently fixed by the body corporate as payable by the owner of the lot;
- the extent to which annual contributions fixed by the body corporate as payable by the owner of the lot, to be disclosed, are based on the contribution schedule lot entitlements and the interest schedule lot entitlements for lots in the scheme; and
- the contribution schedule lot entitlement and the interest schedule lot entitlements as set out in the community management statement.
The BCCM Amendment Act will commence on assent, which is expected to occur without delay, and the new disclosure requirements will apply immediately upon commencement of the Act.
New sections 394 and 395 provide that the new disclosure requirements will apply not only to contracts not yet issued, but also to contacts given to a proposed buyer but not yet signed by both parties.
The transitional provisions in relation to contracts provided to a buyer but not yet signed by both parties require a seller to:
- give a new disclosure statement in compliance with the new s206 or s213; or
- if a disclosure statement was already given to a buyer, a seller is then required to provide a written notice stating the information in new s206(2)(b), which includes the three (3) points of information listed above, and a copy of the community management statement.
The transitional provisions require that the new disclosure statement is to be given to the buyer before the buyer enters into a contract to buy the lot. Should a seller fail to provide the buyer with a disclosure statement prior to signing, the buyer may terminate the contact at any time prior to settlement.
BCCM Form 14
At this stage a new version of the BCCM Form 14 is yet to be released. It is expected that, in accordance with previous practice, when the new BCCM Form 14 is released, there will be a transitional period where both versions of the From 14 will be accepted.
We note that as well as the amendments and additional requirements listed above, there are several other amendments to the BCCM Act introduced by the BCCM Amendment Act and we would advise that you carefully review the BCCM Amendment Act to be fully aware of all the additional obligations.