Selling a strata lot in Western Australia: what must be disclosed

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Western Australia treats two kinds of home sale very differently. Sell a house on its own block and, according to the state's Consumer Protection division, there is no mandatory seller disclosure statement at all. Sell an apartment, a villa or a townhouse that sits inside a strata scheme and the picture reverses: the Strata Titles Act 1985 lists the information the seller must put in the buyer's hands before the buyer signs, goes on policing the sale after the contract exists, and gives the buyer a way out when the seller falls short.

The reason is simple enough. A strata buyer is not only buying walls and a floor. The buyer is also joining a strata company, taking a share of common property, accepting by-laws written by other people and agreeing to pay levies that somebody else will set. None of that can be seen at a home open. It lives in documents, and the law makes the seller produce them.

This guide sets out what those documents are, how and when they are handed over, what happens when something changes between contract and settlement, and when the buyer may avoid the contract. It ends with the much shorter list that applies to a non-strata home. It draws on the fact sheets and forms published by Landgate, the Western Australian land information authority, on the text of the Strata Titles Act 1985 as published on the state's legislation website, and on guidance from Consumer Protection. Where those pages did not answer a question, the guide says so.

Landgate fact sheet on buying and selling strata, and section 3 of the Strata Titles Act 1985 (WA).

The seller's duty in one sentence

Landgate calls it the seller's duty of disclosure. In its resources for strata sellers, the authority explains that Western Australian strata law lists information the seller must give a prospective buyer before the buyer signs a contract for a strata titled lot, and that the information covers two things: the strata titles scheme as a whole, and the specific lot being sold.

Two consequences follow from that sentence. The first is about timing. The duty bites before signature, not at settlement and not when the buyer's settlement agent asks for it. Landgate's resources for strata buyers make the same point from the other side of the table, telling buyers to review everything the seller provides before signing any offer and acceptance contract on a strata property. The second is about who carries the duty. It rests on the seller. A seller may have help assembling the papers, but the pages read for this guide describe the obligation as the seller's own.

Landgate also explains what the material is for. It says the compulsory information should let a buyer make an informed decision and compare one property with another, and more specifically that it should help the buyer gauge how cooperative the strata community is, assess the scheme's financial position, and see the costs that are coming or already running. Each item on the list serves one of those three purposes, which is a useful way to read it.

The rules sit in Part 10 of the Strata Titles Act 1985, which is headed "Protection of buyers". Its first provision, section 156, is titled "Information to be given before contract".

Scheme documents the buyer must receive

The first group of documents describes the scheme. Landgate's fact sheet on buying and selling lists four scheme documents that the seller must give: the scheme notice, the scheme plan, the scheme by-laws and the schedule of unit entitlements.

Each does a different job. The scheme plan is the drawing that shows where the lots and the common property are. The by-laws are the scheme's own rules, the ones the buyer will live under from settlement day. The schedule of unit entitlements allocates a number to every lot, and that number matters more than its dry name suggests, as the section on the lot explains below.

Where the scheme is a leasehold scheme, the fact sheet adds a fifth document: the strata lease for the lot.

Then come the papers that show how the scheme behaves in practice. The seller must give the minutes of the most recent annual general meeting of the strata company, together with the minutes of any extraordinary general meeting held after it. Minutes are where a buyer finds the arguments, the deferred repairs and the votes that did not pass, which is why they sit on the compulsory list rather than being left to a buyer's curiosity. This is the part of the pack that speaks to Landgate's first purpose, the measure of how well the owners work together.

Finally, the seller must give details of any termination proposal that has been put to the strata company. A proposal to terminate a scheme is a proposal to bring the strata arrangement itself to an end, and a buyer is entitled to know that one is on the table before committing to a lot within it.

Levies, accounts and debts

The second group is about money, and it answers Landgate's other two purposes: the scheme's financial status and the costs ahead.

At scheme level, the fact sheet requires the most recent statement of accounts of the strata company. It also requires the estimated strata levy contributions for the next 12 months, and any amount the current owner already owes the strata company.

At lot level the fact sheet is more specific still. The seller must say whether the strata company has set contributions in the previous 12 months. The seller must give the amount of the contributions and the date they fall due, or a reasonable estimate where the figure is not fixed. And where the seller owes a debt to the strata company, three details are required: how the debt arose, when it arose, and the amount outstanding.

The wording allows for the scheme that runs informally. A small scheme may never have struck a formal levy; the question the seller must answer is whether contributions were set in the previous 12 months, and "no" is itself information a buyer can use. Where no amount has been fixed, the fact sheet accepts a reasonable estimate rather than a precise figure, so the seller is asked for an honest forecast, not a guarantee.

For the buyer, the three money items read together. The statement of accounts shows what the strata company holds and spends. The levy estimate shows what the lot will be asked to pay over the coming year. The debt disclosure shows whether the seller is behind. The pages read for this guide do not set out what happens to an unpaid seller's debt at settlement, so that question is left to the contract and to the parties' advisers.

What must be said about the lot itself

The third group narrows from the scheme to the lot. According to Landgate's fact sheet, the seller must identify the lot's exact location on the scheme plan and explain how the scheme plan defines it. That second half matters because in a strata scheme the boundary of a lot is whatever the plan says it is, and a buyer who assumes that a courtyard, a car bay or a store room belongs to the lot needs to see that on the plan rather than take it on trust.

The seller must also state the lot's unit entitlement. The fact sheet explains in plain terms what the number controls: the owner's share of the common property, the owner's share of contributions, and the owner's voting rights. One figure therefore sets what the owner owns in common, what the owner pays and how much say the owner has.

A last item applies only to some lots. Where the lot is what the fact sheet calls a special lot, the seller must give the exclusive use by-laws that apply to it. Exclusive use by-laws are the by-laws that reserve part of the common property for one lot rather than for everyone.

The approved form and how it is delivered

Landgate publishes a form for the purpose. Its page of strata title forms lists, under the heading "Other approved strata forms", a document named "Precontractual disclosure statement to the buyer". Its name describes its job: it is the statement in which the seller makes the disclosures to the buyer.

The form itself could not be read for this guide, so its parts and its wording are not described here. What the Landgate pages do establish is its name, its status as an approved form, and its place in the sequence: it reaches the buyer before the contract is signed.

Paper is not the only way to deliver it. Landgate's fact sheet says the information may be given electronically, on three conditions that must all be met:

1. the seller and the buyer both agree to electronic disclosure;
2. the buyer provides an email address;
3. the buyer acknowledges receiving the information.

The third condition is the one that protects both sides. For the seller it is evidence that the duty was performed and when. For the buyer it fixes the moment from which the documents were in hand, which matters if the sequence of disclosure and signature is ever questioned.

The buyer is not confined to what the seller supplies. The same fact sheet says a buyer may inspect the strata company's files for A$1 and may photograph the material, subject to the regulations. Copies are a different matter: the buyer may pay a regulated fee for them if the strata company agrees, and the fact sheet states that the strata company is not obliged to provide copies. A buyer who wants more than the compulsory pack therefore has a cheap right to look and no guaranteed right to take copies away.

After signing: notifiable variations

Disclosure in Western Australia does not stop at signature. A strata scheme keeps moving while a sale is in progress: owners meet, by-laws change, plans are amended. The Act deals with that through what it calls notifiable variations, which Landgate describes as changes that occur after the contract is signed but before settlement and that the seller must notify to the buyer in writing.

Section 3 of the Strata Titles Act 1985 sorts them into two types. The sorting matters because the buyer's rights are stronger for type 1 than for type 2.

A few points of definition are worth drawing out. Both 5% tests are measured against what the buyer was told before contracting, so the pre-contract statement is the baseline. A type 2 variation is defined as an event in the same period that is not already a type 1 variation, so the two never overlap. The scheme plan and unit entitlement changes in type 2 are those that affect the lot or the common property, and the Act has its own subsection, section 3(7), setting out when an amendment "affects" either. The contracts caught in type 2 are those entered into or varied by the strata company or by the scheme developer for services or amenities.

"Scheme developer" is itself a defined term. For the first subdivision of the land it means the original proprietor; for a later stage carried out under staged subdivision by-laws it means the owners of the lots subdivided in that stage, taken together.

A worked example shows how the area test operates. Assume a lot notified to the buyer before contract as 80 square metres. Five per cent of 80 is 4 square metres. If the lot is later redefined at 76 square metres or less, the reduction is 4 square metres or more, the 5% line is reached, and the change is a type 1 notifiable variation. A redefinition to 77 square metres is a reduction of 3 square metres, or 3.75%, and falls short of type 1, although as a change to the scheme plan affecting the lot it could still be a type 2 variation. The figures are illustrative only.

The unit entitlement test reads the same way on its face, a rise or fall of 5% or more in the lot's proportion. The pages read for this guide do not show whether that is measured as a relative change in the lot's share or in percentage points of the whole scheme, and the difference could be large for a small lot. That is a point to settle from the Act itself in any real case.

The 10 working day clock

Landgate's fact sheet gives the seller a deadline. A notifiable variation must be notified to the buyer in writing within 10 working days of the variation. There is one exception, for sales that are nearly finished: where the variation happens within 15 working days of settlement, the seller must give the notice as soon as practicable instead.

The Act defines its terms. A working day is any day other than a Saturday, a Sunday or a public holiday throughout the State. The settlement date is the date on which the purchase price, or the balance of it, is paid in exchange for the documents that allow the buyer to be registered as owner. For a terms contract under the Sale of Land Act 1970, it is the date the buyer becomes entitled to possession or occupation.

Counting in working days stretches the calendar. As a worked example, assume a fortnight with no public holiday in it: 10 working days is two full weeks of weekdays, so a period of 10 working days covers 14 calendar days. On the same assumption, 15 working days is three weeks of weekdays, or 21 calendar days. A public holiday observed across Western Australia inside the period pushes the end back by a day. The pages read do not spell out whether the day of the event itself is counted, so the example stops at the length of the period.

When the buyer may avoid the contract

To avoid a contract is to bring it to an end by exercising a right the law gives. Landgate's sellers page puts the risk plainly: failure by the seller to disclose all the information required by law may mean the buyer can avoid the contract. The fact sheet then sets out the cases. Part 10 of the Act has four sections on avoidance, 159 to 162; their text could not be read for this guide, so the cases below follow the fact sheet and are not matched to a section number.

Information not given before signing. As Landgate's fact sheet reads, a buyer who was not given the required information before signing may avoid the contract by written notice at any time before settlement.

Information given late. Where the seller supplies the information after signature and it substantially complies, the outcome turns on material prejudice. A buyer who is not materially prejudiced cannot avoid. A buyer who is materially prejudiced may avoid by written notice within 15 working days of the seller's notice.

A type 1 variation the seller did not notify. The buyer may avoid at any time before settlement and does not have to show material prejudice.

A type 2 variation the seller did not notify. The buyer may avoid before settlement, but only if materially prejudiced.

A variation notified late. The buyer may avoid within 15 working days of receiving the notice. For a type 2 variation material prejudice must be shown; for a type 1 variation it need not be.

A variation notified on time. Even a seller who does everything right may lose the sale. The buyer may avoid within 15 working days of the notice if the buyer has not already agreed to the variation in the contract and is materially prejudiced by it.

Three threads run through that list. Avoidance is always by written notice. Every right ends at settlement: the fact sheet says avoidance rights run until then, and no later. And the phrase "materially prejudiced" does most of the work in the middle cases. The pages read for this guide apply the test without defining it or saying which party must prove it, so its meaning in a given sale is a question for the Act and for legal advice.

The words "has not already agreed to the variation in the contract" matter. A change the buyer accepted in advance in the contract is treated differently from one that arrives as a surprise.

In a Western Australian strata sale the seller's disclosure is not one moment at signature. It is a duty that runs until settlement day.

What Part 10 holds beyond the fact sheet

Part 10 runs from section 156 to section 165. Four of its sections carry the avoidance rights, and the Act's table of contents gives their headings: section 159, "Avoidance of contract for failure to give information"; section 160, "Avoidance of contract on notification of variation for material prejudice"; section 161, on failure to disclose a type 1 notifiable variation; and section 162, on failure to disclose a type 2 notifiable variation. Which of the fact sheet's cases falls under which section was not checked against the text.

Five further sections are not explained in the Landgate material read here. Their headings, taken from the same table of contents, show what else the Part covers:

• section 157, "Information to be given after contract";
• section 158, "Delay in settlement for failure to give information";
• section 163, "Proposed lot contract";
• section 164, "Avoidance of contract: manner and effect";
• section 165, "Contracting out prohibited".

Read by their headings alone, section 158 suggests that avoidance is not the only consequence of missing information and that the timing of settlement can be affected too. Section 163 concerns contracts for proposed lots. Section 164 concerns how a contract is avoided and with what effect, which is where a reader would look for the treatment of money already paid. Section 165's heading says that contracting out is prohibited.

The detail under those headings was not read for this guide. That includes any additional disclosure required of a scheme developer, what happens to a deposit when a contract is avoided, and any penalty. They are named here so that a reader knows where the Act deals with them, not to suggest what the sections say.

A house on its own title: the shorter list

Outside strata, the statutory pack disappears. Consumer Protection, the Western Australian government's consumer regulator, states on its page about buying a property by private sale that Western Australia has no mandatory seller disclosure statement.

That does not leave a buyer with nothing. The same page says the real estate agent must disclose relevant facts about the property, especially if directly asked, and it advises buyers to raise any concerns before making an offer. The page does not cite the Act or code behind the agent's duty, and it describes the duty as the agent's; it does not set out a matching statutory list for a seller who sells without an agent.

What the buyer of a house has instead is the contract. Consumer Protection lists the conditions a buyer can ask to add to an offer: approval of a loan, the sale of the buyer's existing property, completion of a building or pest inspection, and the seller repairing or replacing something that is broken. Each is a matter of negotiation. The page also describes the "as is" offer, in which the buyer takes the property in the condition in which it was viewed and the seller does not agree to special conditions such as building or pest inspections.

Two more points from that page frame how much rests on the buyer's own enquiries. There is no mandatory cooling-off period for real estate contracts made in Western Australia, so a buyer cannot sign first and investigate afterwards unless a condition in the contract allows it. And once the seller signs the offer and acceptance form it becomes a binding contract; later changes bind only if both parties initial and date each one.

Set side by side, the two regimes show where Western Australian law has chosen to intervene. For a house, the state leaves the buyer to ask, inspect and negotiate conditions, with the agent's duty to disclose relevant facts as the backstop. For a strata lot, it adds a statutory pack before signature, a duty to report changes afterwards, and rights of avoidance that last until settlement. A strata sale still has the ordinary features of a Western Australian property contract, including the absence of a cooling-off period; the Part 10 rights are tied to disclosure and are not a general right to change one's mind.

Kooky, from Shaka

Kooky edits Agents Estate and builds Shaka, the payment router he made for real estate professionals. One payment comes in, and every agent, agency and party in the deal receives their signed share on closing date.

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