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Strata Amendments – Better Buyer Information

By 24 March, 2020 No Comments

Importance of Disclosure

Ownership of a lot in a strata scheme differs substantially from ownership of a non-strata property. Strata owners are subject to by-laws, unit entitlement, common property and common agreements, all of which impact upon their use, ownership and obligations.

For this reason, it is crucial that every buyer of a lot in a strata scheme receives full disclosure from the seller about the lot they are planning on buying before they sign the contract.

Relevantly, the Strata Titles Amendment Act 2018 (Amendment Act) aims to:

  1. give the most relevant information to a buyer;
  2. set out the information in a clear way;
  3. make sure the buyer knows where they can get more information;
  4. make sure the obligation on the seller to provide information is reasonable; and
  5. clarify on what grounds a buyer can avoid the contract if the seller fails to provide the information to the buyer.

Current Act

Disclosure Required

Under section 69A of the current Strata Titles Act 1985 (WA) (the Act), the seller must provide the buyer with:

  1. a copy of the strata plan;
  2. details of the unit entitlement;
  3. the by-laws of the strata; and
  4. other general information.

Further disclosure obligations apply, according to section 69B of the Act, if the seller is the original proprietor of the lot. In this case, the original proprietor is required to also provide the buyer with information about service contracts, levies and disposition of the common property.

Upcoming Changes to the Strata Titles Act 1985 (WA)

Disclosure Required

The list of disclosure items a seller of a strata lot needs to provide to a buyer is set to become much more extensive as a result of the Amendment Act.

Under the Amendment Act, additional information a seller will need to provide to a buyer includes:

  1. the strata lease for the lot, if it is a leasehold scheme;
  2. the name and address for service of the strata company;
  3. either the minutes of the most recent annual general meeting or a statement as to why minutes were not provided;
  4. either the last statement of accounts or a statement as to why this was not provided;
  5. the location of the lot on the scheme plan;
  6. the boundaries of the lot, as contained in the scheme plan;
  7. contributions that will be payable by the owner if this has been determined and if not a reasonable estimate;
  8. details of any debt owed by the owner of the lot to the strata company; and
  9. details of any exclusive by-laws that apply to the lot.

There will be further disclosure obligations imposed, according to the Amendment Act, where the scheme has not yet been registered, the first annual general meeting has not been held, the scheme developer owns 50% or more of the lots in the strata or the scheme developer owns lots with 50% or more unit entitlement in the strata.

Consequences of a Lack of Disclosure

If a seller fails to provide the required disclosure, the Amendment Act provides for certain remedies to the buyer.

One such option for the buyer would be to postpone settlement on their purchase of the strata lot. A buyer may, by written notice to the seller, postpone the settlement date if the seller did not provide all of the required information before the contract for sale was signed.

Another potential option for the buyer, according to the Amendment Act, will be to avoid the contract for sale. This option will arise where the seller has failed to give the buyer all of the required information prior to the contract being signed and the buyer has suffered material prejudice. This option is only available to a buyer prior to the settlement date.

If you are the buyer or seller of a strata lot in Western Australia and have any questions relating to disclosure obligations or strata more generally, please don’t hesitate to reach out to our Jason O’Meara on (08) 6188 3311 or at jason@pragma.law.

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