What the seller must tell you about the body corporate

If you are buying a standalone house on its own section, you can skip this one. It is about flats, apartments and townhouses, where you own your own place and share the building or the grounds with the other owners.³

That arrangement is a unit title, you own your own unit, and you share the common parts like hallways, lifts and grounds with the other owners. The owners together make up the body that runs those shared parts. Those owners together are the body corporate, the body made up of all the unit owners in a unit title development. It runs and maintains the shared parts of the building and grounds, and can charge owners a levy to pay for it.

Before you agree to buy, the seller has to give you a written report on that body corporate.¹ Lawyers call it a pre-contract disclosure statement. The rest of this page is about what is in it, when it has to reach you, and what you can do if it turns up late or wrong.

When the statement is due

When you buy a property, you and the seller sign a contract. That contract is a sale and purchase agreement, the written contract you and the seller both sign, covering the price, the property, and any conditions you’ve each agreed to.

The disclosure statement has to reach you before that. So it is not paperwork that turns up after the deal is done. You should have it in front of you while you are still working out whether to buy.

What is in the statement

Regulations set the list, and it runs longer than most people expect.² It falls into four groups.

The money. Your levies for the current year, three years of financial statements, and the balance of every fund the body corporate holds. A summary of the insurance, including the excess and what it does not cover.

The building. Whether the body corporate knows of weathertightness problems, earthquake risk, or other significant defects, and whether anyone has fixed them. Any repair reports from the last three years.

The plan. The long-term maintenance plan, the work proposed under it for the next three years, and what that work is expected to cost.

The arguments. Three years of meeting minutes and papers, and any court or tribunal case the body corporate is caught up in.

What the statement cannot tell you

It cannot tell you the building is sound. The body corporate only has to report what it already knows about.²

If nobody has ever looked at the roof, there is nothing on file about the roof, and the statement will say nothing about the roof. It tells you what someone noticed and wrote down.

This is the part that can cost you money. The body corporate has to repair and maintain the shared parts of the building, and it raises the money by levying the owners.⁴

So if that roof starts leaking the month after you move in, fixing it is the body corporate’s job, and your share of the bill arrives as a levy. You are one of the owners now. A problem nobody had recorded before you bought does not stay someone else’s problem.

The second statement

A second statement is due no later than the fifth working day before settlement, the day your lawyer pays the balance of the price and the property becomes yours. Your lawyer also arranges for your ownership to be recorded on the title.¹

This one is different in a useful way. The first statement comes from the seller. The body corporate itself has to sign this second one off, so the seller cannot quietly shade the numbers.

The body corporate can refuse to sign while the seller still owes it money.¹ Without it the statement is not complete, so the seller’s unpaid levies can end up delaying your settlement.

If it turns up late, or wrong, or not at all

You have two options.

Delay settlement. The simpler of the two. It applies if the seller never gave you a complete and accurate pre-contract statement, or gave you one later than five working days before settlement. You do it by written notice.¹

Cancel the agreement. Harder, because three things can block it:

• The error has to be substantial, meaning it changes what you get or what it costs you.
• The seller gets ten working days to put it right after you give notice.
• An inaccuracy the seller flagged honestly, because the information never existed or nobody could find it, does not count.

So late or missing paperwork does not automatically let you walk away. Whether an error counts as substantial depends on the error, which makes it a question for your lawyer.

Why older guides get this wrong

The rules changed on 9 May 2023.¹ Before that date, the statement did not have to contain nearly as much.

Buyers who wanted the minutes, the financial statements or the maintenance plan had to ask for them separately, and pay for them. Now all of that arrives in the statement the seller has to give you anyway, at no cost to you.

So if a guide tells you to request additional disclosure within five working days, it is describing the old rules.

What to ask your lawyer

1. Have I been given the pre-contract disclosure statement, and was it before I signed?
2. Do the minutes from the last three years mention water, cladding, or a big levy rise?
3. What does the long-term maintenance plan say is due in the next three years, and is there money set aside for it?

Say these as they are written. They are normal questions to ask.

ConveyanceNZconveyance.co.nz