Information for prospective buyers
The Unit Titles Act and the Regulations now require sellers to provide a wider range of information to prospective buyers. They also give buyers additional rights if these information requirements are not met.
Pre-contract disclosure statement
Before entering into a sales and purchase agreement, sellers must provide a wider range of information in the pre-contract disclosure statement. This includes financial statements, maintenance, weather tightness and related information, and body corporate general meeting minutes for the last 3 years.
A different set of information is required if the pre-contract disclosure statement relates to an ‘off-the-plans’ sale. (Many pre-contract details are not available at the off-the-plans stage).
The information is listed below in the ‘Pre-settlement disclosure statement’ section.
The body corporate must keep the necessary records to allow for pre-contract and pre-settlement disclosure statements. As most of the information disclosed is held by the body corporate, it is important that these details are readily available to the seller.
If the body corporate does not have some of the required information, the pre-contract disclosure statement should highlight this. It should also note the specific information that is not provided, and the reason the information is not included (for example, that it does not exist, or despite reasonable efforts, cannot be found).
Information required in a pre-contract disclosure statement
Read the new legislation relating to pre-contract disclosure statements(external link) — New Zealand Legislation
Pre-settlement disclosure statement
Additional information is now required once the agreement for sale and purchase has been entered into, and before the settlement of the sale. A seller must provide a pre-settlement disclosure statement after the sale and purchase agreement is entered into, and before settlement. The pre-settlement disclosure statement must be provided at least 5 working days before the settlement date.
New information is required as part of the pre-settlement disclosure statement for an ‘off-the-plans’ purchase:
- the details of any contract that will bind the body corporate or the unit owner after the settlement date
- the details of any obligation arising from the decision of a court or tribunal that will bind the body corporate or the unit owner after the settlement date
- a copy of the long-term maintenance plan
- a copy of the written agreement setting out the body corporate manager’s terms of employment or engagement
- a copy of the body corporate operational rules that apply to the body corporate, including any amendments, revocations, or additions to the rules that have been made by the body corporate but that do not yet have effect
- a copy of the minutes of the most recent general meeting of the body corporate.
The pre-settlement disclosure statement for off-the-plans sales must include this information, where possible (some of the details in the pre-settlement disclosure statement may not be available for new off-the-plans units).
Information required in a pre-settlement disclosure statement
Read the new legislation relating to pre-settlement disclosure statements(external link) — New Zealand Legislation
Ability to cancel an agreement or delay settlement – pre-contract disclosure
The buyer may be able to delay settlement, or cancel the sale and purchase agreement if the pre-contract disclosure statement is late, not provided, is incomplete or inaccurate. Previously there were no statutory consequences for failing to provide complete and accurate pre-contract disclosure. If a seller has not provided a complete and accurate pre-contract disclosure statement 5 working days before settlement, the buyer can give notice to delay settlement until 5 working days after an accurate and complete pre-settlement disclosure statement is provided.
The following resources are provided to help you understand when you can delay settlement or cancel an agreement.
Example scenario 1: Pre-contract disclosure statement – delay settlement
Lena is buying an apartment, and the settlement date is Friday 28 July 2023.
The pre-contract disclosure statement should have been provided by the seller before Lena entered into the agreement to buy the apartment, but Lena chose to enter into the agreement without receiving this.
Lena is patiently waiting for the seller to provide her with an accurate and complete pre-contract disclosure statement at least 5 working days before settlement. For Lena, this is by Thursday 20 July. On Friday 21 July Lena has not received the pre-contract disclosure statement. Her lawyer advises her she can either delay the settlement date or send the seller notice of her intent to cancel the sale. Lena feels this is the perfect apartment and so she decides to delay until 5 working days after the statement is received. Her lawyer provides this notice in writing to the seller on Friday 21 July, this is the first delay.
On Thursday 27 July, Lena receives the complete and accurate pre-contract disclosure statement. Settlement is then set for 5 working days later, Thursday 3 August. Lena is happy she has secured her dream apartment.
Example scenario 2: Pre-contract disclosure statement – cancel agreement
Maria is buying an apartment and the settlement date is Friday 19 May 2023.
The seller had provided Maria a pre-contract disclosure statement before they entered into the sale agreement, this was received on Thursday 11 May.
On the same day Maria’s lawyer checked the pre-contract disclosure statement and unfortunately it is not complete and accurate. Maria’s lawyer advises her the requirements to cancel the agreement have been met. Maria advises her lawyer to send notice of intent to cancel the agreement. The notice is sent by the lawyer on Monday 15 May by email and is considered given the following working day. The seller now has 10 working days from the date the notice is given to provide the accurate and complete pre-contract disclosure statement.
It is now Tuesday 30 May and Maria unfortunately has not received the complete pre-contract disclosure statement. She decides she will not pursue this any further and will go ahead and cancel the purchase of this apartment. Maria has 5 working days to cancel the agreement for sale and purchase by sending the seller notice.
Maria has 5 working days to cancel the agreement for sale and purchase by sending the seller notice in writing. She asks her lawyer to do this and the lawyer sends the notice on the same day.
Disclosure statement example scenarios with visual timelines
Pre-contract disclosure flowchart
Read the legislation relating to pre-contract disclosure cancelling an agreement or delaying settlement(external link) — New Zealand Legislation
Ability to cancel an agreement or delay settlement – pre-settlement disclosure
The buyer may be able to delay settlement, or cancel the sale and purchase agreement, if pre-settlement disclosure is late, not provided, is incomplete or inaccurate. If a seller has not provided a complete and accurate pre-settlement disclosure statement 5 working days before settlement, the buyer can delay settlement until 5 working days after an accurate and complete pre-settlement disclosure statement is provided.
The buyer must give the seller notice if they intend to cancel the sale. This notice provides the seller an opportunity to correct the pre-settlement disclosure statement. If the amended pre-settlement ownership and utility interest statement is complete and accurate, the buyer cannot cancel the agreement under this provision.
The following resources are provided to help you understand when you can delay settlement or cancel an agreement.
Example scenario 3: Pre-settlement disclosure statement – delay settlement
Tama is buying an apartment, and settlement date is Friday 16 June 2023.
His lawyer tells that the seller needs to provide him with an accurate and complete pre-settlement disclosure statement at least 5 working days before settlement. In Tama’s case, this is by Friday 9 June. Tama has not received the pre-settlement disclosure statement in time. His lawyer advises him he can either delay the settlement date or send the seller notice of his intent to cancel the sale. Tama really wants the apartment, so he decides to delay until 5 working days after the statement is received. His lawyer provides this notice in writing by email to the seller on Monday 12 June. This notice is considered given the following working day and this is the first delay.
On Wednesday 14 June, Tama receives the complete and accurate pre-settlement disclosure statement. Settlement is then set for 5 working days later, Wednesday 21 June. Tama is happy he has secured an apartment in the city close to his job.
Example scenario 4: Pre-settlement disclosure statement – cancel agreement
Sione is selling his apartment. He has to provide an accurate and complete pre-settlement disclosure statement to the buyer at least 5 working days before settlement, which is Monday 21 August 2023. Sione has been busy at the same time preparing to move overseas permanently for a new job. This means he has overlooked the timeframe to get the pre-settlement disclosure statement sorted and has missed the 5 working day deadline (Monday 14 August).
It is now Tuesday 15 August. The buyer wants a quick sale as they need to move themselves and can’t delay settlement by long, so he asks his lawyer to issue Sione with a notice of intent to cancel the sale by email (considered given the following working day). Sione now has 10 working days from Wednesday 16 August to provide the buyer with the pre-settlement disclosure statement. Sione is focused on packing up his apartment and selling his furniture and forgets again to complete the pre-settlement disclosure statement. It is now Wednesday 30 August.
The buyer now has 5 working days to choose whether to cancel the purchase or proceed. The buyer decides to cancel as he is frustrated his family are now unable to move in as planned. On Monday 4 September the buyer asks his lawyer to cancel the agreement to purchase the apartment by sending notice in writing to Sione. This makes things difficult for Sione and he wishes he had taken the time to get things right.
Disclosure statement example scenarios with visual timelines
Pre-settlement disclosure flowchart
Read the legislation relating to pre-settlement disclosure cancelling an agreement or delaying settlement(external link) — New Zealand Legislation
Access the Pre-contract disclosure statement and the Pre-settlement disclosure statement (standard and Off the plans) please go to ‘Forms and resources’ page.
