Selling Your Unit in a Body Corporate
Following on from our December 2011 newsletter article we are encountering a lot of problems where Body Corporate/ Unit Title properties are not complying with the Unit Titles Act 2010.
What is a Body Corporate/Unit Title property?
It is a freehold form of unit ownership, created by statute. There is a separate certificate of title for each unit and each unit owner is a member of the Body Corporate. The Body Corporate is responsible for owning and maintaining the common area around the separate units which often includes driveways, elevators and stairwells as well as setting annual financial contributions which all owners are required to pay to cover the costs of maintaining the common area and paying insurance. The Body Corporate is required to hold regular meetings to make decisions regarding the whole property.
A Body Corporate must function in accordance with the Act and its Regulations and must comply with a minimum set of powers and duties. Briefly, these include:
- A Body Corporate must comply with any registered operational rules. This however pre-supposes that there are such operational rules. Since the inception of the 2010 Act, any rules which were registered on the titles needed to be reviewed, amended and re-registered. If that was not done, then the default rules in the Act are the rules that will apply.
- The Body Corporate must establish and maintain a long-term maintenance plan. This is mandatory. A Body Corporate, big or small, cannot avoid establishing and maintaining such a plan.
- The Body Corporate does not need to operate a long term maintenance fund, however to dispense with this fund a resolution must be passed and signed by all members of the Body Corporate at a general meeting.
- The Body Corporate must open an operating account – which is another mandatory requirement. This account is required to cover common area maintenance, insurance and any other common expenses.
- If the units in the development are adjoining then there must be one insurance policy. Any separate policies will need to be disestablished and a new policy put in place which covers all units.
- A Body Corporate committee is mandatory if there are more than ten units in the development.
Selling a Unit Title property
Prior to a Vendor entering into an agreement to sell a Unit Title property, they must provide the purchaser with pre-contract disclosure. Then, prior to settlement the Body Corporate must provide a pre-settlement disclosure statement (this Certificate is a more detailed version of the basic Section 36 Certificate under the old Act) and a certificate of insurance. There is also provision where a purchaser can request additional information prior to settlement, but this must be at their cost.\
If you are selling your Body Corporate property or considering selling it in the near future then we suggest you contact us, before listing, to ensure your property complies with the provisions of the Act.