February 16, 2023
Body Corporate Disclosure Statements Queensland
The law in Queensland requires the Seller of a lot in a community title scheme to provide a disclosure statement to the Buyer of the property prior to entering into the contract.
This disclosure statement should be signed first by the Seller, and then the Buyer (the reverse order that a contract of sale is signed).
The requirement to provide this statement to the Buyer is an important one, as failing to do so gives the buyer the right to terminate the contract. It is a legislative requirement, and it cannot be excluded by agreement.
What Is A Body Corporate Disclosure Statement?
A body corporate disclosure statement contains information about the lot being purchased and the body corporate, such as what current levies are payable, and the contact details of the Secretary and Strata Manager of the body corporate.
It is sometimes called a section 206 Disclosure Statement, after the section in the Body Corporate and Community Management Act 1997 (Qld) (BCCM Act) that imposes the obligation to provide the disclosure statement on the Seller.
What Needs To Be Included In The Body Corporate Disclosure Statement?
There is no standard form for section 206 disclosure statements, so they can all appear different to each other, and the precise content will vary between providers.
The minimum information that must be contained in the disclosure statement includes;
- A real property description of the lot
- The current levies for the lot
- The name, address, and Community Title Scheme (CTS) number of the body corporate
- Whether the new lot owner will be responsible for any improvements on common property
- The name of the Secretary and the Strata Manager of the body corporate and their contact details
- Whether the body corporate holds any assets
Other information will also at times be included, such as financial statements, implied warranty information and details of the body corporate insurance. However this is dependent on each individual Disclosure Statement provided by the Body Corporate.
If the statement is not signed, is not substantially complete, or contains incorrect information, the contract could be at risk. It is therefore highly important that the disclosure statement is prepared correctly and contains the most current information available in the body corporate records.
It is also a good idea for Buyers to do their own due diligence, and not rely solely on the information in the disclosure statement. For example, the Buyer could conduct their own inquiries by inspecting the body corporate records or the community management statement. This would be at an additional Cost to the Buyer.
A special condition such as a Due Diligence condition can be inserted in the contract giving the Buyer the right to terminate the Contract if they are not satisfied with the results of their due diligence.
It is also important that the Buyer completes appropriate searches to verify the information in the disclosure statement. Your conveyancer or solicitor will run a search for body corporate insurance as part of the conveyancing process.
Who Creates The Body Corporate Disclosure Statement?
Disclosure statements are usually created by the body corporate manager, for a fee.
Do I Need To Contact The Body Corporate?
Your conveyancer or solicitor will alert the body corporate to new ownership of the lot by sending a Form 8 to the Secretary once your purchase is finalised.
The body corporate will then update their records to add you as the new owner of your lot.
Your levies and other correspondence will then be sent to the address nominated on the Form 8.
So What Is A Body Corporate?
A body corporate is a legal entity established when property is subdivided and registered as a community titles scheme. All lot owners become members of the body corporate when they buy their lot.
A community titles scheme allows lot owners to privately own part of the property (their lot), and also share ownership of common property with other lot owners. It must comprise at least two lots, so large unit complexes are community titles schemes, but so are smaller apartment complexes and duplexes.
What Does A Body Corporate Do?
There is more than one type of community titles scheme, and there are some variations in the laws governing how the body corporate is to run things.
Broadly, the role of the body corporate is to administer common property and body corporate assets for the benefit of all of the owners, and to undertake functions required under body corporate legislation.
The duties of the body corporate include;
- Maintaining the common property
- Making and enforcing by-laws to govern the administration of the scheme, including use of the common property, the management of body corporate assets and how owners and other people living in the scheme use their lots.
- Assisting lot owners via an insurance provider as to the building insurance and insurance of the common property. (Please note that Buyers and lot owners should always make their own inquiries as to the extent of any insurance policies in place.)
- Managing any assets pertaining to the body corporate
- Keeping records of the body corporate
- Making decisions about levies for the upcoming financial year, and other contributions from owners. These include;
- An administrative fund levy to cover the cost of administering the scheme
- A sinking fund levy to cover any anticipated capital expenditure, major capital items and major structural repairs
- A special levy might be imposed in the case of an unexpected expense not accounted for in the sinking fund budget
How Does The Body Corporate Make Decisions?
The body corporate makes decisions about the above at an annual general meeting and through the body corporate committee of members who are elected at the AGM.
More Questions?
The law governing community titles schemes in Queensland is complex, and whether you are buying or selling, it is critical that you have a good understanding of your rights and obligations. Our experienced, friendly conveyancing lawyers are happy to chat about body corporate disclosure statements, or any other aspect of conveyancing law in our great state – reach out to us today!
The above is not legal advice and is general information only.
