Nick is looking to sell his apartment in central Wellington in the next couple of months.  He hadn’t realised that from 20 June this year he will need to have a whole list of documents ready to show prospective purchasers (or buyers) before they will be able to sign an agreement to buy the apartment.  Failure to do so would mean that the sale could not proceed!

Recent changes to the law regarding unit titled properties such as apartments mean that vendors (or sellers) need to disclose a significant amount of information to purchasers before they sell unit titled properties.

Vendors cannot contract out of the requirements.  Further, if a Vendor doesn’t comply with pre-settlement disclosure below then the purchaser can cancel the agreement!

There are 3 types of disclosure.

1. Pre-contract disclosure

Before Nick sells his apartment he will need to give prospective purchasers a statement called a “pre-contract disclosure statement” detailing:

  • The amount of Body Corporate levies payable for the unit/apartment and the period covered by those levies;
  • Maintenance proposed in the year following the date of disclosure and how the cost is proposed to be met;
  • The balance of any fund or account held by the Body Corporate;
  • Details of any claims made under the Weathertight Homes Resolution Service or through the Courts;
  • An explanation of:
    • Certificates of Title
    • Unit plans, unit entitlements and unit titled property ownership
    • Easements and covenants (restrictions) on the title
    • The LIM report
    • Body Corporate rules
    • What information is required to be contained in pre-settlement disclosure (explained below)
    • What information is required to be contained in additional disclosure (explained below)
  • How further information about the items listed in paragraph (e) can be obtained; and
  • An estimated cost of providing an additional disclosure statement.

Vendors like Nick will need to plan how they are going to access and provide this information.  Their Body Corporate secretary, their lawyers, their real estate agent and the Council will all be involved in providing some of the listed information.

2. Pre-settlement disclosure

There is a second type of disclosure which needs to occur before settlement happens, called “pre-settlement disclosure”. This will give more detailed information about levies, contracts the Body Corporate has entered into and details of any legal proceedings against the Body Corporate (among other things).  This information will need to be provided by the Body Corporate.

3. Additional disclosure

The purchaser can then also request further information in the form of “additional disclosure” if they want to.  Additional disclosure will cover things like insurance details for the building, money owed to the Body Corporate, contact details for the Body Corporate and a summary of the long term maintenance plan (which is a new 10 year plan for maintenance of the complex).

As indicated above, Vendors should be aware that if the information in pre-settlement disclosure and additional disclosure is not provided within 5 working days of settlement then the purchaser can cancel the contract (with 10 days notice).  It is therefore very important that Bodies Corporate are ready to have this information available for owners selling their apartments.

Those who are thinking about selling their apartment from now on will need to make sure they get access to these documents or make sure their Body Corporate committee has processes in place to get the documents ready, otherwise purchasers may pull out of sales!