Proposed body corporate certificate for Queensland fails buyers, yet again

My recent comments on disclosure of strata matters to buyers of real estate in Queensland triggered some spirited debate. One commentator referred me to the Government’s proposed reforms in this area and an exposure draft of a new body corporate certificate – and we can be thankful that it’s only a draft, and not policy (yet) Here are  the five reasons why -  

1. This is a certificate given by the body corporate, not the seller. Yet more than half of the information required to be disclosed is about the seller’s lot, and not the body corporate’s responsibilities for the common property. The seller’s disclosure can be made in the contract of sale. What this certificate should do is tell us something useful about the body corporate and its internal affairs. For example, are there any known unremedied building defects? Forcing disclosure on the hard issues not only better informs the buyer before entering a binding contract, but also puts the pressure on the body corporate to do its job...or at least declare that it hasn’t.  

2. The proposed new certificate is 11 pages (too much) while the current prescribed certificate is two pages (not enough). By my rough calculations, six and a half pages of the new certificate is general information about owning an apartment and not about the body corporate that the buyer is joining. There is already research by strata academics in Queensland that question the notion that more disclosure is necessarily better disclosure, while noting the limited capacity of buyers to take in voluminous material at the point of sale. General information for buyers and body corporate disclosure should be separated, as is done in Victoria. Further, the best format for general information for buyers and owners in Australia comes from Landgate, located in Western Australia, and is available in hard copy booklet form and online. By stripping out the general information and making it accessible elsewhere, buyers are given the hard facts about the purchase at hand.  

3. According to my yet published research (thesis coming soon), there are 26 matters that a body corporate has the power to action that materially affect a buyer. The current Queensland certificate only discloses three (12%) of these things NSW does better with 35% and Victoria winning with 62%. The new proposed Queensland certificate improves on this position taking its score up to 10 (38%). However, the new Queensland form says nothing about the things that matter, or should matter to buyers; fire safety compliance, pool safety compliance, work health and safety compliance, unremedied defects, unrepaired common property, combustible cladding, asbestoses, and window safety for child protection. There are objective tests for all these things, and offering a straight answer to a straight question seems reasonable.  

4. These forms will be completed by body corporate managers on behalf of the body corporate. Some of the fields in the new form require a summary of key details of complex legal arrangements about body corporate management, and long-term agreements about caretaking, management and letting. This task will sit uncomfortably with managers. There will be objections to increased fees for doing this additional work and the risk of not summarising the key details correctly will result in managers simply annexing the agreements to the certificates. An 11-page certificate which is already too long will turn into hundreds of pages quickly.  

5. Queensland strata laws are notoriously complex in comparison to other states and territories. The new form covers all the different types of QLD strata in one form, including 2 lot schemes, part strata schemes with building management statements, and layered schemes with umbrella agreements and subsidiaries. It’s just too much for buyers, and their advisors, to take in. If strata in QLD must be that complex, then different certificates for different types of strata should be prescribed to keep the information relevant.