Need for Owners Corporations to disclose strata-related matters to prospective purchasers of Lots.

This is a difficult area.  On the one hand, one feels an obligation to ensure that an incoming owner’s decision to purchase is made on a fully-informed basis.  On the other, one fears possible legal action if a disappointed vendor believes that he realised less than he expected because the sales process was undermined by existing owners pointing out undisclosed problems with the apartment.  In one recent sale in my building, the owner (a local entrepreneur who clearly had no intention of living in the property) sought agreement to a plan to open up the kitchen area.  We agreed to this, subject to an engineering report and local council approval.  However, he also stated an intention to paint, generally upgrade and recarpet.

We were then taken aback when, without further notification to the Owners Corporation, he proceeded to instal wooden flooring.  We asked him what measures were being taken to comply with our standard by-law requiring floors to be covered in a way to avoid causing nuisance to other residents (given that the layout of the building means that the apartment’s main living area is directly above a neighbour’s bedrooms).  The response was the predictable data sheet from the floor’s supplier claiming full compliance with BCA and “strata” requirements.  The latter is of course untrue, since “strata” does not require any numerical measurement of sound levels but, rather, a lack of disturbance to neighbours — something that can be determined only when the floor is in place!

My reaction to this was to ask that the correspondence be kept on file by our Managing Agent so that there would at least be the potential for a prudent would-be purchaser to be forewarned.

With all respect to Whale, whose posts I value as a source of information and wisdom, I was talking about something more substantial than “faults with every little nut, bolt, and washer … that’s loose or missing”.  Noise from wooden floors is one of the hottest issues in Strata, as witness the report of the recent NSW review and the frequency with which it is raised in this forum.  My point was a need to warn a potential purchaser, who may have done a careful physical check of the unit before bidding, that he could still find himself unexpectedly in breach of a key by-law.

Some years ago our (ACT) EC issued a breach notice to a unit owner about a fence that had been erected without permission and enclosing an area of common property well beyond the unit boundary. Some previous ECs had tried to deal with it and got nowhere. [In their defence they were dealing with an earlier version of the Act that had less clear processes for dispute resolutions.] The unit owner ignored the breach notice but soon after put the unit up for sale.

We wrote to the owner that removing the fence might help to avoid problems that a potential purchaser might have getting a loan because banks would want to know if there were any unapproved alterations. We also wrote to the real estate agent including a copy of the breach notice and asking him to advise any purchasers who seemed seriously interested that the fence would have to be removed and that the unit area was actually smaller than the enclosed area suggested. We put a copy of the correspondence on the records where they could be found. The real estate agent was very good about it. He checked with the EC to make sure he understood exactly where the unit boundaries were, what kinds of fences could be approved and where. The people who bought the unit took down the ugly, wrong-sited fence promptly, enquired about putting up a new fence of an approvable sort in the right place but in the end preferred the view without a fence and landscaped the area very nicely. 

If you are sure of your position and deal openly with all concerned, I think good outcomes can be achieved, particularly at the time of a unit sale.