Pre-contract disclosure changes for Unit Title sales…

A new piece of legislation has made its way through Parliament which puts in place changes to the Unit Titles Act 2010 (“the Act”).  This legislation covers all unit titled properties. 

One of the main areas of change is around disclosure when selling a unit titled property.  These changes include:

1. Additional information is required in the Pre-Contract Disclosure Statement (the statement provided when the Agreement for Sale and Purchase is signed), including more detail around weather-tightness issues or Earthquake-prone issues, remediation reports in relation to any issues, financial statements and audit reports for the previous three years and the review date for the Long Term Maintenance Plan.
2. If the Pre-Contract Disclosure Statement has not been provided by a date five working days before the settlement date of the sale, the purchaser is entitled to delay settlement until five working days after the Pre-Contract Disclosure Statement is provided.  This essentially creates a penalty for failing to provide the statement.
3. If the vendor, after receiving a further notice from the purchaser, still does not complete an accurate Pre-Contract Disclosure Statement, then the purchaser may elect to cancel the agreement, or elect to proceed.  There are some restrictions around cancellation, including if there has been reasons given in the statement for not being able to provide full and accurate information, and that the information did not exist or could not be found.  This means the sale could, in some circumstances, fall through entirely if the information is not provided.
4. Additional Disclosure (which was a term under the previous version of the legislation) has been repealed, so will no longer exist.

It is important for all owners of unit titled properties to be aware of, and comply with, the new requirements when selling unit titled properties to avoid having Agreements cancelled or settlements delayed.