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Understanding Body Corporate Disclosure Statements

Disclosure statement

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In Queensland, sellers of lots in a community title scheme must provide a disclosure statement to prospective buyers before entering into a contract.

This requirement is governed by section 206 of the Body Corporate and Community Management Act 1997 (BCCM Act).

If the seller fails to provide a property disclosure statement, the buyer may have a right to terminate the contract before settlement, making this requirement crucial in the property transaction process.

What is a body corporate disclosure statement?

A disclosure statement is a disclosure about the body corporate, it is not a disclosure by the body corporate.

Importantly, a disclosure statement is never issued by the body corporate itself, or by the body corporate manager. The seller of the property must prepare and issue the disclosure statement.

A body corporate manager may supply a template document containing some, but not all, of the required information about the body corporate. The seller must then review and verify this information and complete the remaining disclosure sections of the disclosure statement.

It is not possible for any person other than the seller to provide the disclosure statement. The seller is the person entering into the contract to sell their lot, and they hold the legal responsibility to make an accurate disclosure.

Use of a template ‘information for disclosure statement’

The body corporate management company, including BCsystems, may provide a partially filled template ‘information for disclosure statement’ for a service fee. This provides an extract of information, which can be verified by the body corporate management company.

That information usually includes:

  • The committee formation and contact details
  • Detail of the approved levies for the lot
  • Detail of any insurances held by the body corporate
  • Assets owned by the body corporate
  • Lot entitlements for the lot, and the aggregate lot entitlements
  • Balance of the sinking fund at the end of the last financial year

For the completion of the remaining elements of the disclosure statement, the seller may make those other disclosures personally, or may engage their solicitor to assist them manage their disclosure obligations.

Key components of the body corporate disclosure statement

There is no statutory form for a disclosure statement, leading to variations in their appearance.

Most sellers in Queensland will receive a template from their real estate sales agent, or their conveyancer as part of the draft sales contract.

 A compliant disclosure statement must include:

  • A real property description of the lot
  • The current levies for the lot
  • The name, address, and community titles 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 committee secretary and the body corporate manager and their contact details
  • Whether the body corporate holds any assets
  • Any other matters transferrable during the purchasing process

Additional information, such as financial statements, warranty details, and insurance information, may also be required under the specific law applicable to the individual property.

Importance of accurate and complete information

The accuracy and completeness of the disclosure statement are paramount. If the statement is not given, which may include if the document is not signed, is incomplete, or contains incorrect information, the sales contract could be jeopardised.

It is therefore crucial that the disclosure statement is prepared carefully and reflects the most current information available in the body corporate records.

References:

Body Corporate and Community Management Act 1997 – Queensland Legislation – Queensland Government

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