Many agreements being signed now will be subject to the new seller’s disclosure regime.
Agreements for sale and purchase for a unit title property will be subject to the new disclosure regime if entered into before 20 June with settlement after 27 June 2011. Agreements entered into on or after 20 June are also subject to the new regime. There is a transitional regime, but only for agreements entered before 20 June with settlement dates between 20 June and 27 June. This is a very short and limited transition!
You will recall sellers need to undertake pre-contract, pre-settlement and, if requested, additional disclosure under the new Unit Titles Act 2010. Read our previous article on this.
For those agreements within the transitional regime:
• There is presumably no need for pre-contract disclosure to be made.
• Buyers cannot delay the settlement date or cancel the agreement for sale and purchase if pre-settlement disclosure is not made.
• Buyers cannot request any additional disclosure.
• The section 36 obligations on a seller remain.
We expect these disclosure requirements to cause practical difficulties for many sellers and bodies corporate.
Sellers of unit title properties should take legal advice before signing the contract. Things that need to be addressed include:
• The requirement in the standard agreement for sale and purchase to obtain a s.36 certificate.
• Whether the agreement should be conditional on disclosure being made.
• Whether sufficient time is allowed for disclosures to occur (especially given these requirements will be new to body corporate secretaries).
• Whether there is likely to be any difficulties in obtaining the information that is now mandatory.
• Ensuring the pre-contract disclosure statement is ready to be provided before the agreement is signed (click here if you want to download the form this needs to be in).