What a seller must tell you before you sign, and when you can walk away

Every article in this series so far has been about what a strata scheme is. This one is about what a seller has to tell you before you sign, and what you can do if they do not.

It is the part of strata that catches people out, because the protections are real but they are narrow, they run on their own clock, and most of them depend on one phrase: material prejudice.

The seller must disclose before you sign, not before you settle

Section 156 of the Strata Titles Act 1985 requires the seller of a strata lot or survey-strata lot to give the buyer certain information before the buyer signs the contract of sale. Not before settlement. Before signing.

The disclosure comes in two parts. Part A is general information about what owning a strata lot means. Part B is the specific detail about this scheme and this lot, with the scheme documents attached. Part B can sit inside the contract itself, but only in a prominent position. Both parts can be given electronically, but only if the buyer has consented to that.

What has to be attached

• The scheme plan showing the location and definition of the lot
• The by-laws, including any made but not yet registered at Landgate. A strata company has three months to register a by-law change, so a title search alone will miss recent ones
• Staged subdivision by-laws, if the scheme has them
• The schedule of unit entitlements, for the lot and for the whole scheme
• The scheme notice, for schemes created on or after 1 May 2020
• The minutes of the most recent annual general meeting, and any extraordinary general meetings since. One meeting cycle, not several years
• The last statement of accounts
• The strata lease, for a leasehold lot
• Details of any debt the seller owes the strata company or a utility, and the contributions determined in the last 12 months or estimated for the next 12

Two lawful gaps. A 2-lot scheme is not required to keep minutes or statements of account at all under section 140(1), and a scheme of 3, 4 or 5 lots can adopt a by-law exempting itself under section 140(2). In those schemes the seller provides a statement to that effect instead.

The 10-year plan is not on the list. Neither is the insurance policy. If you want them, ask the seller, or apply to the strata company yourself under section 107.

If the disclosure is late, wrong or missing

This is where people assume more than the law gives them.

• Given before you sign. No avoidance right. This is the normal case.
• Given after you sign but before settlement, and it substantially complies. If you are not materially prejudiced by it, you cannot avoid the contract. If you are, you can avoid it by written notice within 15 working days of being given the seller’s notice.
• Never given, and the missing information would have shown something that materially prejudices you. You can avoid the contract at any time before settlement, by written notice setting out the grounds and the details of the prejudice.

You can also postpone settlement, by written notice, for up to 15 working days after the date the seller finally complies.

If something changes after you sign

The Act calls these notifiable variations, and splits them in two.

Type 1, the serious ones

• The area or size of the lot drops by 5 per cent or more
• The lot’s share of unit entitlements moves by 5 per cent or more, up or down
• The strata company or scheme developer enters into or varies a contract for services or amenities that is likely to affect your rights
• Anything relating to a proposal to terminate the scheme is served on the seller

Type 2

• The scheme plan is modified in a way that affects the lot or the common property
• The schedule of unit entitlements is modified in a way that affects the lot
• The by-laws are modified
• A lease, licence, right or privilege over the common property is granted or varied

The notice periods

The seller must notify you within 10 working days of the variation. If it happens within 15 working days of settlement, the seller must notify as soon as practicable.

• Notified on time. You may avoid the contract within 15 working days of being notified, if you are materially prejudiced and you did not already agree to the variation in the contract.
• Notified late. You have 15 working days from when you actually received the notice.
• Not notified at all. For a type 1 variation you may avoid the contract any time before settlement, and you do not have to prove material prejudice. For a type 2 you may avoid before settlement, but you do have to show prejudice.

Note that these clocks run in working days, which is not the same as the business days used for most contract deadlines. If you think you are on one of these clocks, get advice that week.

Your vote, between contract and settlement

This one is barely known and genuinely useful. Under the standard contract the seller must tell you about any proposed resolution of the strata company between the contract date and the day you are registered on title, give you a copy, and vote the way you direct if you tell them to. They must not propose or vote for a resolution without your written approval, and must make sure their mortgagee does not either.

So if the scheme is about to resolve on a large item of expenditure while you are between contract and settlement, you are not a spectator.

Where disputes go

Arguments about whether a right to avoid exists, or whether the seller disclosed what they had to and in time, go to the State Administrative Tribunal, not to a court.

The practical version

For a seller: get the pack built before the property is on the market. Late or thin disclosure is the one thing that can undo a good sale price weeks after you thought it was done.

For a buyer: read the by-laws and the minutes before you sign, because the strongest position you will ever have is the one before your signature is on the page. After that, every remedy runs on a short clock and most of them require you to prove you were materially prejudiced.

Not sure what happens between the contract and the keys? Read what a settlement agent actually does in Perth.

The whole series

• Part 1. Which kind of strata scheme is it?
• Part 2. What your strata levies actually pay for
• Part 3. Who insures the building?
• Part 4. What changes with the size of the scheme
• Part 5. How to read a 10-year plan
• Part 6. By-laws, and what unpaid levies mean at settlement
• Part 7. What the seller must tell you before you sign (you are here)

This article is general information about how strata schemes work in Western Australia. It is not legal advice, and the position for any particular scheme or contract can differ. Check the documents for the scheme you are buying into, and get your own advice before you act.

By James Yeoman, Director of KPR Perth Pty Ltd T/A Key Performance Real Estate