A vendor of a unit needs to be aware of the requirement to provide:
- a pre-contract disclosure statement before the purchaser enters into an agreement;
- an additional disclosure statement, if requested by the purchaser, no later than five working days after it is requested; and
- a pre-settlement disclosure statement, at least five working days before the settlement date.
Vendors should be made aware of the perilous consequences of failing to provide a pre-settlement disclosure statement or an additional disclosure statement in time. If these statements are not provided in time, the purchaser has two options:
- postpone settlement to the fifth working day after the date on which the latest disclosure statement was given; or
- if the purchaser does not want to postpone settlement and would prefer to cancel the agreement, section 151 of the Unit Titles Act 2010 allows the purchaser to cancel the agreement by giving the vendor 10 days' notice in writing.
Cancellation of the agreement based on the failure to provide a pre-settlement or additional disclosure statement on time seems like a pretty severe penalty – nonetheless – that's what the Act provides for.
Oddly, there are no consequences for not providing a pre-contract disclosure statement. There is also no right to cancel the agreement if the contents of the pre-settlement or additional disclosure statements aren't satisfactory. It is appropriate for purchaser to include a condition making the agreement subject to their approval of the pre-settlement and any additional disclosure statements.
Vendors should also be aware that they will not receive the deposit until a pre-settlement disclosure statement, and additional disclosure statement (if requested) is provided, and the purchaser authorises the release of the deposit. This is another good reason to issue these statements promptly.
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.