Review of the Unit Titles Act 1972 - Discussion Document, May 2006
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5.7 Improving disclosure information
Unit title developments are different from other properties, and people need certain information so they can make good decisions.
The proposals in this section cover:
- what owners and buyers must be told
- what the developer must tell the body corporate
- the body corporate's right to review contracts
- the penalties for not disclosing information.
Issues
There is no comprehensive set of compulsory disclosure requirements and this contributes to the issue of poorly informed consumers. The Act currently contains two basic disclosure requirements made up of:
- section 36 certificates of proprietor liability, which give information about any money the unit owner still owes, repair contracts, or lawsuits that haven’t been settled
- limited reporting from bodies corporate to unit owners, such as the requirement to give unit owners a copy of the audited accounts (rule 12 of the Second Schedule).
Because the disclosure requirements don’t cover enough information, it is difficult for people to find out what they need to know. This causes problems for everyone. Unit owners and buyers can’t make informed decisions. Bodies corporate can’t manage and maintain the property effectively. It is also hard to identify conflicts of interest.
| Sellers, through their solicitors, must give buyers a standard information statement. The content of the statement will be set by the Act. The statement must contain general information about buying a unit title property to help make sure buyers understand unit titles and the role and significance of the body corporate. |
| Sellers must give buyers information specific to the unit title they are intending to buy, including: - a copy of the relevant unit plan
- a copy of the relevant certificate of title
- the individual unit entitlement of this unit
- the current annual body corporate levies for this unit
- other information currently contained in section 36 certificates
- details about any other liabilities and responsibilities of the owner of this unit
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| Sellers must give buyers information about the development as a whole, including: - the body corporate rules
- contact details for the body corporate and body corporate committee (if applicable)
- key details of contracts between the body corporate and third parties for the administration and maintenance of the development
- details of the long-term management plan
- balances of any funds or accounts operated by the body corporate
- insurance cover
- statement of future development, if applicable (see P12)
- details of ground lease if applicable
- details about any other liabilities and responsibilities of unit owners.
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| Developers must give the body corporate all contracts and other information it needs to maintain and manage the development. They must do this within a reasonable time after handing over ownership and control to a new body corporate. The information will include: - all building plans and specifications
- recommended maintenance schedules
- asset schedules
- warranty and guarantee details
- copies of all existing and proposed maintenance and service contracts, including contractors’ contact details.
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| Developers must tell the body corporate if they have entered into contracts or made arrangements on behalf of the body corporate with companies or individuals that the developers are associated with. The body corporate can then identify any real or potential conflicts of interest the developer may have |
| A new body corporate will be able to review any contracts the developer entered into when acting as the original body corporate. This will include contracts for body corporate managers. If a review is to take place, it must take place no later than 12 months after the new body corporate's first annual general meeting. |
| The body corporate must regularly remind all unit owners they have the right to inspect and take copies of all information about the management and maintenance of the development. |
| An agreement for sale and purchase can be cancelled if a seller doesn’t comply with the compulsory disclosure requirements before the date of settlement. |
| If a buyer loses money because a seller isn't truthful or doesn't give all available information before settlement, the buyer can seek compensation from the seller. |
| Developers must compensate a body corporate if it loses money because the developers haven't complied with their disclosure obligations. Bodies corporate will be liable to unit owners in the same way. |
| It will be an offence for anyone to purposely: - not comply with a disclosure requirement
- give false or misleading information. There will be a fine for these offences.
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Effect of proposals
Buyers will understand the type of property title they are buying, including the role of the body corporate. They will be able to make more informed decisions, which may help prevent disputes in the future. They will have a basis for deciding whether the body corporate rules and contracts suit them, and whether they can afford to pay the ongoing costs.
Bodies corporate will be able to identify and review contracts entered into by developers that they might want to change.
Unit owners will be able to get an accurate understanding about the state of their development. They may be encouraged to take an active part in the decisions made by the body corporate.
| Do you agree with the proposals for disclosure provisions? If you do, is there anything else we should consider? If you disagree, please explain why. |
| What are the advantages and disadvantages of the proposals for you? |
| Will the proposals have any financial implications for you? If so, please explain giving as much information as you can. |
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