A young property owner was selling an apartment they had purchased some years prior.  The Body Corporate did not have a professional manager and one of the owners prepared the various disclosure statements for the Body Corporate when owners sold their units.

The owner subsequently agreed to bring forward their settlement date but forgot to tell the owner who sorted the statements for them of the new settlement date.

Five days before the new, earlier, settlement date the purchaser’s lawyer contacted the vendor’s lawyer and said that because a Pre-Settlement Disclosure Statement hadn’t been issued the purchaser was exercising their right to delay settlement. 

The property owner was shocked as she needed the money from the sale on the settlement date in order to on-purchase her next property.  She had to quickly contact the other owner to ensure a Pre-Settlement Disclosure Statement could be drawn up and sent to the Purchaser’s lawyer.

If you have entered into an Agreement to sell your apartment and provided the Purchaser with a Pre-Contract Disclosure Statement, you will also need to provide a Pre-Settlement Disclosure Statement (PSDS) closer to the settlement date.

A PSDS should be provided to the Purchaser at least five working days before the settlement date.

The PSDS gives more details of the financial commitment that an owner is making in buying a unit titled property and allows the vendor’s lawyer to apportion the Body Corporate levies in their settlement statement. 

This statement is to be provided by (and therefore signed by) the Vendor, but will also require a certificate from the Body Corporate certifying that the information contained in it is correct.  In addition, an insurance certificate from the Body Corporate’s insurance company should be provided at the same time.

The following information should be included in a PSDS (to the extent it is available):

  • The unit number;
  • The body corporate number;
  • The amount of the contribution levied by the body corporate under section 121 of the Act in respect of the unit being sold;
  • The period covered by such contribution;
  • The manner of payment of the levy;
  • The date on or before which payment of the levy is due;
  • Whether a levy, or part of a levy, due to the body corporate is unpaid and, if so, the amount of the unpaid levy;
  • Whether legal proceedings have been instituted in relation to any unpaid levy;
  • Whether any metered charges due to the body corporate are unpaid and, if so, the amount of unpaid metered charges;
  • Whether any costs relating to repairs to building elements or infrastructure contained in the unit are unpaid and, if so, the amount of unpaid costs;
  • The rate at which interest is accruing on any money owing to the body corporate by the seller;
  • Whether there are any proceedings pending against the body corporate in any court or tribunal;
  • Whether there are any proceedings: 
    • Initiated by the body corporate and pending in any court or tribunal; or
    • Intended to be initiated by the body corporate in any court or tribunal;
  • Whether there is any written claim by the body corporate against a third party that is yet to be resolved; and
  • Whether there have been any changes to the body corporate operational rules since the Pre-contract Disclosure Statement.

Failing to provide an accurate and complete PSDS may give the Purchaser the right to cancel the Agreement or delay settlement. It therefore pays to seek legal advice from a legal professional if you are unsure of your disclosure obligations.

Leading law firms committed to helping clients cost-effectively will have a range of fixed-price Initial Consultations to suit most people’s needs in quickly learning what their options are.  At Rainey Collins we have an experienced team who can answer your questions and put you on the right track.