On 6 April 2011 important amendments were made to the Body Corporate and Community Management Act ("BCCMA"). These amendments came into effect on 14 April 2011 and require a Vendor (including a mortgagee exercising power of sale) to provide additional disclosure at the time of entering into a contract for the sale of existing and new lots in a community titles scheme.

What are the changes?

The changes to the BCCMA make a distinction between community titles schemes that contain 2 lots and those with more than 2 lots.

More than 2 lots:

The amendments that came into effect on 14 April 2011 require vendors to disclose the following additional details to purchasers before a purchaser enters into a contract of sale.

  • the extent to which the annual contributions in the disclosure are based on the contribution schedule lot entitlements for the scheme;
  • the extent to which the annual contributions in the disclosure are based on the interest schedule lot entitlements for the scheme;
  • that the contribution schedule lot entitlements and the interest schedule lot entitlements are as set out in the community management statement;
  • a copy of the community management statement for the scheme;
  • a copy of any new community management statement for the scheme within 14 days of it having issued.

In relation to the fifth bullet point above, a buyer can terminate the contract if he/she is materially prejudiced by any changes made in the new community management statement.

2 lot schemes:

A 2 lot scheme is defined as a scheme which has the following characteristics:

  • there are only 2 lots included in the scheme;
  • the scheme is not part of a layered arrangement of community titles schemes;
  • there is no letting agent for the scheme; and
  • the lots included in the scheme are residential lots.

In relation to 2 lot schemes the following additional disclosure is required:

  • provide details of each person responsible for keeping body corporate records in the scheme;
  • any assets in a two-lot scheme valued at over $1,000; and
  • a copy of the community management statement for the scheme; and
  • a copy of any new community management statement for the scheme within 14 days of it having issue.

In relation to the fourth bullet point above, a buyer can terminate the contract if he/she is materially prejudiced by any changes made in the new community management statement.

The requirements for 2 lot schemes have not yet commenced. We will keep you advised on the date of commencement.

What vendors must do?

All contracts (including those which are under negotiation, about to be marketed and those which have already been signed by the purchaser (but not the vendor)) that are part of a community title scheme must immediately be amended or re-issued to include:

  1. a new BCCM Form 14; and
  2. a new REIQ body corporate disclosure statement, pursuant to section 206 of the BCCMA; and
  3. a copy of the current community management statement (if not already provided).

Items 1 and 2 above relate to standard form documents.

The new REIQ disclosure statement is available to be downloaded from the QLS website.

The new version of the form 14 is yet to be released. We will post an update with the links to the new documents as soon as they become available. In the interim, we recommend that vendors include the above information as part of all contracts which they issue or which have already been issued but have not yet been signed by the purchaser.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.