A seller must give the Form 2 and prescribed certificates to a buyer before the buyer signs a contract. These are referred to collectively as the disclosure documents in the legislation.
Failure to comply with the seller disclosure obligations can give rise to termination rights by the buyer, so it is important to deliver accurate and complete documents. The Form 2 requires a yes/no answer to various questions. A solicitor can explain to a seller what the questions mean and work out whether searches are required to complete the forms. If the seller is selling a lot in a body corporate, such as an apartment or a townhouse, additional information will be needed.
The information required to be disclosed by the seller reflects existing statutory obligations such as owner-builder works, disputes about trees, providing pool safety certificates or information about whether the property is on the contaminated land register. The requirements also reflect warranties that a seller has been giving under the standard sale of land contracts for many years (eg title encumbrances, whether there is a proposed resumption affecting the property). The new process simply consolidates the obligations in one place.
What should I be aware of?
You & The Law alongside the Queensland Law Society recommends a seller speak with a solicitor about the seller disclosure documents as early as possible, ideally around the same time they meet with their real estate agent, so that the seller disclosure documents can be prepared in parallel with other listing activities such as cleaning, staging, repairs, and photography.
For some properties, the Form 2 and prescribed certificates will be very straightforward, but for others, it may take more time. If the property is an apartment or a townhouse in a community titles scheme, a body corporate certificate is also needed. There can be some complexity obtaining the information required for body corporate certificates, so early engagement with their solicitor is important if the seller is selling an apartment.
Timing will vary, but taking steps early will give a seller the best chance of having the documents accurately completed and available when an interested buyer is ready to make an offer.
Before buyers sign the dotted line on such an important contract, they will now receive more upfront information about a property, helping them make informed choices and avoid nasty surprises.
Seller disclosure investigations also benefit sellers. While the new rules might add some cost and time for sellers, the more transparent process means fewer last-minute renegotiations or deals falling through.
The early disclosure work undertaken means any potential problems with the property are known upfront and can be worked out early.
Yes, it will. If the property being sold is an apartment in a body corporate, then the seller must provide a Form 2 and the prescribed certificate known as the ‘body corporate certificate’. The seller must also give a copy of the most recent community management statement for the scheme. These requirements also apply to duplex sales.
The body corporate certificate will outline key information for a buyer like the details of the community titles scheme, information about by-laws and exclusive use areas, lot entitlements, owner contributions and amounts owing, insurance, other financial information and the contact details for the body corporate manager (if any).
There are limited reasons for when a seller cannot give a body corporate certificate. Sellers should seek legal advice about when these circumstances might apply.
There can be some complexity obtaining the information required for body corporate certificates, so if the seller is selling an apartment, townhouse or a duplex, it is important they speak to their solicitor early in the process.
You & The Law alongside the Queensland Law Society always encourages sellers and buyers to seek legal advice before they make significant legal decisions of this kind. A solicitor acts in their client’s best interests throughout the transaction.
A solicitor will speak with sellers about what they know about the property to help them complete the Form 2 and, if needed, the body corporate certificate. The Form 2 requires a yes/no answer to various questions. A solicitor can explain to a seller what the questions mean and work out whether searches are required to complete the forms. A solicitor can also help prepare the draft contract of sale, to address any issues identified during the disclosure process in the contract.
Queensland Law Soceity members are well-placed to advise all parties to the contract about the new seller disclosure changes and other critical aspects of the sale agreement.
If the disclosure documents are incomplete or inaccurate, the buyer may be able to terminate the contract.
The law requires the disclosure documents given to the buyer to be accurate at the time the information is given to the buyer:
There is no statutory obligation to update the information if it becomes inaccurate after the disclosure documents are given to the buyer, but a seller should be wary of:
- engaging in misleading or deceptive conduct in the intervening period between giving the statement and signing the contract, if the seller knows the information in the disclosure documents has become inaccurate
- ensuring compliance with any disclosure obligations in the contract of sale including accurate statement of title information at the time the contract is entered into. For example, under the REIQ Contract a seller promises to deliver title free from encumbrance, other than the encumbrances disclosed.
A solicitor can help sellers understand what issues or changes they need to keep watch for throughout the selling process, to ensure they do not inadvertently mislead buyers and to ensure the contract documentation is accurate before it is signed by all parties.
Top tip
In Queensland conveyancing must be done by a law firm. The firm may employ paralegals or conveyancers, but their work must be supervised by a solicitor. Use our search to find firms that focus on conveyancing and property law.
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