Sellers of unit title properties are now required to provide mandatory pre-contract and pre-settlement disclosure to prospective buyers.
This marks a shift away from the principle of “caveat emptor” or “buyer beware” which has traditionally governed the buying and selling of real estate in New Zealand.
Pursuant to the new Unit Titles Act 2010 (“UTA 2010”) which came into force on 20 June 2011, sellers of unit title properties are no longer able to remain silent on certain matters that affect their unit title property. Sellers of unit title properties will be required to disclose relevant information buyers, including prospective buyers, up front.
There are three types of disclosure statement relevant to buyers and sellers under the UTA 2010 as follows:
Pre-contract Disclosure Statement
A seller MUST provide a Pre-contract Disclosure Statement to prospective buyers BEFORE entering into an Agreement for Sale and Purchase. This applies to conditional and unconditional Agreements for Sale and Purchase.
Additional Disclosure Statement
A buyer MAY request that the seller provide them with an Additional Disclosure Statement. A seller MUST provide the Additional Disclosure Statement to the buyer no later than the 5th working day after the date of the buyers request. The Buyer is responsible for the reasonable costs of Additional Disclosure Statement. However, a seller must not withhold the Additional Disclosure Statement for non-payment of costs.
Pre-settlement disclosure statement
The Pre-settlement Disclosure Statement MUST be provided by the seller to the buyer at the seller’s cost and at least 5 working days prior to settlement.
The content of each type of Disclosure Statement is prescribed by the Unit Titles Regulations 2011.
All disclosure statements MUST be signed by the seller or a person authorised by the seller AND be certified by the Body Corporate.
Buyers may delay settlement or cancel contracts if disclosure is not made within certain specified timeframes. There is also a potential for liability if sellers provide information that is false or misleading or if sellers withhold information.
If you require any advice or further information on the matters dealt with in this publication please contact the lawyer at Farry and Co. who normally advises you, or alternatively contact:
Fahra Manning
09 379 0055 or 03 477 8870
The information contained in this publication is intended as a guide only. It does not constitute legal advice and should not be relied upon as such. Professional advice should be sought before applying any of the information to particular circumstances. While every reasonable care has been taken in the preparation of this publication, Farry and Co. does not accept liability for any errors it may contain.