The commencement date for the Unit Titles Act 2010 (Act) has just been announced.
From 20 June 2011, sellers of unit title property will need to comply with disclosure obligations under the Act, including in respect of existing agreements, and will be obliged to provide buyers with up to three separate disclosure statements.
The Act also brings in many other changes relating to bodies corporate and developers of unit titles, which will be the subject of a separate update.
Types of disclosure
The required disclosure statements are:
Click here to view the table.
All disclosure statements must be dated and signed by the seller or a person authorised by the seller.
If, before the settlement date, the seller becomes aware of any inaccuracies in any disclosure statement, the seller must give another statement correcting those inaccuracies.
Effect of non-disclosure
If the additional disclosure statement or the pre-settlement disclosure statement is not given within the required timeframes, the buyer may:
- postpone the settlement date until the fifth working day after the day all disclosure is provided; or
- cancel the agreement by 10 days' notice in writing.
Effect of disclosure
The Act states that a buyer is entitled to rely on the disclosed information as "conclusive evidence" of its accuracy. A seller and the body corporate will need to ensure the disclosed information is accurate.
A buyer does not have any remedies prescribed under the Act if it is not happy with any of the disclosed items. Accordingly, a buyer will need to include either a specific condition or warranty in the sale and purchase agreement if it wishes to be able to approve the information in any disclosure statement.
Prohibition on contracting out
The Act prohibits any provision in an agreement that seeks to exclude or limit the obligation to disclose under the "disclosure" subpart of the Act. It remains to be seen how widely this prohibition will be applied.
Our view is that the prohibition will not restrict including buyer-friendly amendments (such as providing that the seller must also bear the costs of additional disclosure). However, it may affect standard vendor clauses relating to limitations on liability, costs and options for cancellation.
Receivers and mortgagees of unit title developments will need to be aware of the disclosure obligations and potential liability under the Act when exercising their power of sale.
The Act comes into force on 20 June 2011 and applies to all sale and purchase agreements from that date. Accordingly, you should consider the provisions of the Act for any existing or new agreements that may be uncompleted after 20 June 2011.
Click here for further details on the timing of disclosure obligations on the commencement of the Act.