It’s vitally important to check strata titles for changes to strata company by-laws – or risk having the deal fall over.
We’ve talked before about the importance of completing Form 29 and Form 28 when transacting on a strata property. But simply handing the buyer Form 29 (which details the standard by-laws) is not enough.
Agents need to make sure that the information on Form 29 and 28 is current by checking the encumbrances on the strata Title for any changes to strata company by-laws, before writing the offer and acceptance. The buyer needs to be notified of any changes, and should be given these along with Form 28, Form 29, a strata plan identifying the lot and a statement of unit entitlement.
According to the Joint Form of General Conditions, the vendor warrants that they are not aware of any change, or proposal to change, stata company by-laws. Therefore if the seller fails to disclose changes, the buyer may have the right to terminate the contract or persue legal action. In other words, forgetting to check for changes to the by-laws might cause your deal to fall over.
And there are sound reasons the buyer may choose to terminate the contract if they were not made aware of the by-laws.
In one case, a buyer had made an offer on a strata title property, and was eager to move in with her two dogs, who she considered family. However, after her offer was accepted, she became aware that strata company by-laws had recently been changed to ban pets – but she had not been informed of the changes before she signed.
Faced with the prospect of having to give up her pets, she instead cancelled the deal and moved on to a different property.
One could imagine a similar scenario in which two young first home buyers signed to buy a strata title, but were not informed that strata by-laws had been changed to make the strata a 55s-only area. The buyers would face the choice of either trying to cancel the deal, or renting out their property to older tenants and having to pay back their first home owner’s grant.
It’s likely they would prefer to terminate the contract.
These two scenarios illustrate just how important it is to give buyers the required notifiable information before writing up an offer and acceptance. Checking the title for encumbrances, such as a change of strata by-laws, could save both the agent and the seller a lot of hassle later.
Image by Trevor via Flickr.