CHANGES TO BODY CORPORATE AND COMMUNITY MANAGEMENT ACT

1997
AFFECTING CONTRACTS ENTERED INTO AFTER 14 APRIL 2011

Changes to the Body Corporate and Community Management Act 1997 (“Act”)
which have a significant effect on contracts of sale for strata titled lots became
law and must be complied with from 14 April 2011.

There is now a requirement for a copy of the Community Management Statement

for the Scheme (“CMS”) to be given to a buyer of an existing lot with the
disclosure statement which is required to be given under the Act.

It would be prudent to obtain a receipt from the buyer by which the buyer would
acknowledge having received a copy of the CMS.

The disclosure statement which the seller is required to give to the buyer under
the Act must now also contain the following further statements:

(a) the extent to which annual contributions fixed by the body corporate and
payable by the owner of the lot are based on the contribution schedule lot
entitlements for lots in the scheme;

(b) the extent to which annual contributions fixed by the body corporate and
payable by the owner of the lot are based on the interest schedule lot
entitlements for lots in the scheme;

(c) that the contribution schedule lot entitlements and the interest schedule lot
entitlements for the Scheme are set out in the CMS.

There is a new form of disclosure statement to be given in relation to existing

lots (under section 206 of the Act) issued by the REIQ and developers will need
to have prepared new disclosure statements for off the plan sales (to be given
under section 213 of the Act).

In addition, a new version of the BCCM Form 14 Warning statement will

be required but is yet to be released.

We will post a link to the new statement once it has become available.

Immediate Action

Because the new disclosure obligations now apply, any contracts for the
sale of strata titled lots which were not signed by both parties prior to
14 April 2011:

1. must be re-issued with the new BCCM Form 14 (when issued) and
disclosure statements which comply with the above amendments; and
2. in relation to existing lots, a copy of the CMS must be given to the
buyer with the disclosure statement.

This is the safest approach having regard to the fact that the transitional
provisions relating to the amendments provide that the new disclosures are to be
given before the buyer enters a contract and it can be argued that a buyer does
this when the buyer signs the contract.

Not doing so could allow a buyer a right of termination under any contract for a
unit in a community titles scheme entered into after 14 April 2011.

If you require any further explanation of these amendments and what steps
should be taken to comply with them, please contact Rob Lalor or Brian
McLaughlin on 3852 5055.

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