Philip Chandler & Frank Marvin
F ull disclosure is at the heart of new unit-title legislation which took effect last month, Queenstown property manager Susan Sawyer says.
“The focus of the new regime is to promote transparency and enable buyers to accurately assess the costs and liabilities attached to a unit-title property,” she says.
With 30 years in the game, Sawyer of Maori Hill Property Ltd has often seen unit buyers saddled with nasty surprises.
“I’ve come across many owners who were either not aware or didn’t understand the implications of buying into a body-corporate environment.
“You come to the first body-corporate levy, you send out the invoice and people say ‘what’s this for?’”
“They don’t even understand what they’ve bought into,” Sawyer says.
Such ignorance should be a thing of the past with the new legislation’s three-step disclosure regime, she hopes.
Step one is a mandatory “pre-contract disclosure statement” covering such basics as the current levy by the body corporate – the owners’ management collective – and how much the body corporate has in the bank, its proposed maintenance programme for the year ahead, and whether the property’s had a leaky-home problem.
Step two is “additional disclosure” which the prospective buyer may demand but has to pay for.
This covers insurance policies taken out by the body corporate, contracts which it’s entered into, and a summary of the long-term maintenance and funding plan.
The final step is the mandatory “pre-settlement disclosure” – including any unpaid levies owed to the body corporate, unit repairs remaining unpaid, and details of any legal proceedings the body corporate may be tangled up in.
This third-stage information must be handed over not later than five days before settlement and can form the basis of a subsequent legal claim by the buyer against the seller.
“The disclosure requirement is very onerous on the vendors now,” Sawyer says.
It will also cost, she warns – perhaps $200 for step one, $500 for step two and $300 for step three.
Sawyer says she’s pleased some local real estate agents are “educating vendors well” on their new obligations.
Body corporates will also need better management and systems in place to ensure the required information is available when owners need it, she says.