Page 1464 - Week 04 - Thursday, 26 March 2009
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needed to be addressed in the meetings and the submissions the government received from the public about the issues paper.
It has not been uncommon for unit owners to complain about how undisclosed defects have occasioned significant inconvenience or cost to them. For example, during discussions owners have told my officers of a number of difficulties they have encountered with problems not identified at the time of sale which, had they been identified, would have had little impact on price and would have been capable of reasonably easy remedial action. However, because vendors had not disclosed the matter, the problems had not been remediated until they became apparent, and then not without some significant cost. Last year the government acted to address the issue of inadequate vendor disclosure. I take issue with the suggestion that this legislation was rushed. As I have outlined, there has been quite a lengthy process of discussion and consultation.
Disclosure is particularly important in relation to the purchase of a unit because the purchaser effectively becomes liable to discharge part or whole of the unfunded liabilities of the owners corporation. This approach is consistent with that taken in other jurisdictions in relation to unit titles and is akin to the enhanced disclosure rules included in the ACT legislation with ordinary residential sales. For example, the Civil Law (Sale of Residential Property) Act 2003 requires the inclusion of a wide range of information and contracts and requires the seller to include in the contract a range of conditions. The new requirements underscore the need for any unit owner to take a continuing and active interest in the owners corporation and to deal fairly with potential purchasers.
The vendor is the best person equipped to make disclosures in relation to defects and liabilities. I would like to give an example. The government is aware of a recent case involving a balcony in an owners corporation. The balcony was parting company with the building; it was actually coming away from the building. The defect was not disclosed in the certificate, the minutes or books retained by the body corporate. If the owner was aware of the defect, or ought reasonably to have been aware of it, then under the implied warranty provisions the owner would be required to disclose it in the contract or risk the buyer seeking to cancel the contract. In this case the sinking fund or the owners corporation may not have met the costs of the remedial work nor similar work on related balconies, if required.
The provisions, as passed into legislation, create a better balance between the vendor and purchaser with respect to disclosure, and these are provisions that Mrs Dunne wants to deny potential purchasers in the ACT. The passage of these provisions further reduces the need for an owners corporation to provide details about the unit title in the form of a section 75 statement, and those provisions have also been adjusted. In doing so, the legislation permits appropriate access to owners corporation records in the event that a particular matter needs to be resolved to the satisfaction of a purchaser. There are, no doubt, provisions of the law that all of us should, and do, hold in memory at all times. However, there are many more rules that we simply need to be able to access when it is necessary to undertake a particular transaction.
The minutiae of the law of contract and trade practices probably fall into the second class for the majority of unit owners. These are rules that should be clear and fair and
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