Buying and selling a lot

Owning a lot in a community titles scheme is likely to appeal to buyers for the benefits it offers relating to common property management and scheme governance within a mixed-use development.

Each community titles scheme will have its own community corporation own set of by-laws to govern the scheme, and in most instances, its own common property.

The autonomy of schemes is expected to provide an attractive prospect to buyers looking to ensure that the specific needs of their usage type (for example, residential, retail or commercial) are well-catered to. See benefits of community titles to learn more.

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Key considerations for buyers

  • Every buyer of a lot in a community titles scheme or proposed scheme in Western Australia must be given information about their lot and the scheme before they sign a contract (the offer and acceptance).
  • The buyer of a community titles scheme lot is buying into a community environment, where the scheme they are buying into may be one of several community titles schemes in the community scheme.
  • Buying a lot in a community titles scheme comes with shared ownership of common property in that scheme, as well as shared ownership of the common property in the schemes to which the buyer's scheme belongs.
  • A buyer will have an obligation to comply with the scheme by-laws for both their scheme and the community titles schemes to which their scheme belongs.
  • A buyer will have a liability to pay contributions to the community corporation established for the community titles scheme in which the lot is located. Those contributions may include a proportion of the community corporation expenses for each of the other community titles schemes to which their scheme belongs.
  • It is essential that the right information is provided to a buyer before they buy a lot so that they understand the different rights and responsibilities associated with owning a lot in a community titles scheme and being part of the broader community scheme.
  • The seller must also give the buyer information about certain variations (changes) to their lot, their scheme and the broader community scheme, should they happen after the buyer signs the contract but before settlement.

Buyer protection provisions in the Act

The buyer protection provisions in the Community Titles Act 2018 (the Act) aim to:

  • Give the most relevant information to a buyer about the lot they are buying, the scheme that the lot is in and information about the broader community scheme.
  • Set out the information in a clear way.
  • Make sure the buyer knows where they can get more information.
  • Make sure the obligation on the seller to provide information is reasonable.
  • Clarify on what grounds a buyer can avoid the contract if the seller fails to provide the information to the buyer or provides it late.

Information the seller must provide

The Act states that the seller must provide the buyer with information prior to a buyer signing a contract for the purchase of a lot in a community titles scheme – which is:

  • About the community titles scheme
  • About the lot
  • About the common property

Additional information requirements also apply when:

  • The seller of a lot is the original subdivision owner.

The regulations may also specify other information the seller must give to the buyer.

About the community titles scheme

The seller must give the buyer the following information about the community titles scheme:

  • The name and address of the seller.
  • The community development statement (if there is one in force for the community scheme).
  • The scheme documents (scheme notice, scheme plan, scheme by-laws, including those not yet registered and schedule of unit entitlements) for the community titles scheme to which the lot belongs and for any community titles scheme to which the scheme belongs.
  • The name and address for service of the community corporation and of each related community corporation.
  • Either of the following:
    • The minutes of the most recent annual general meeting and any extraordinary general meetings held since then of the community corporation for the scheme in which the lot is located.
    • A statement of why the seller has been unable to obtain the minutes.
  • Either of the following:
    • The statement of accounts last prepared by the community corporation for the scheme in which the lot is located.
    • A statement of why the seller has been unable to obtain a statement of accounts.
  • A copy of the notice of a current termination proposal received from the community corporation (if applicable).

About the lot

The seller must give the buyer the following information about the lot in the community titles scheme:

  • The location of the lot on the scheme plan, or an extract from the scheme plan for the community titles scheme.
  • The definition (boundaries) of the lot, as contained in the scheme plan.
  • The unit entitlement of the lot and the sum of the unit entitlements of all the lots in the community titles scheme.
  • The amount and due date of the contributions payable by the lot owner, if contributions have been determined by the community corporation within the previous 12 months.
  • A reasonable estimate of the amount of the contributions likely to be payable for the 12 months following the proposed settlement date, if contributions have not been determined.
  • Details of any debt owed by the owner of the lot to the community corporation including how the debt arose, the date on which it arose and the amount outstanding.
  • Details of any exclusive use by-laws that apply to the lot.

If the lot has not yet been created, the information which is required includes:

  • The latest version of the draft community development statement, amendment of the community development statement, scheme document or amendment of scheme document, relevant to the lot proposed to be created.
  • A reasonable estimate of the contributions payable for the lot.
  • A reasonable expectation of lease, licence, special privilege or any other matter relevant to the proposed lot.

About the common property

The seller must provide the buyer the following information about the common property in the community titles scheme or any related community titles scheme in the community scheme:

  • Details of the terms and conditions of any lease or licence over common property.
  • Details of the terms and conditions of any right of exclusive use and enjoyment or special privilege over common property.
  • Details of any proposed lease, licence, right of exclusive use and enjoyment or special privilege over common property.

When the seller is the original subdivision owner

The act of subdividing land by a community scheme occurs by either:

  • the registration of a community titles scheme in the community scheme, or
  • the registration of an amendment of a community titles scheme in the community scheme.

The original subdivision owner is the person who owns, will own or previously owned the land subdivided by such community titles scheme or amendment of community titles scheme.

Under the following circumstances extra information requirements apply when the seller of a lot is the original subdivision owner:

  • If the community titles scheme has not been registered.
  • If the first annual general meeting of the community corporation has not been held.
  • The original subdivision owner owns lots in the community titles scheme with:
    • An aggregate relative unit entitlement of 50 % or more.
    • The relative unit entitlement of a tier parcel in the community titles scheme is 50% or more.
  • If the original subdivision owner owns lots in the community titles scheme of that tier parcel with an aggregate relative unit entitlement of 50% or more.
  • If the original subdivision owner otherwise controls 50% or more of the voting power of members of the community corporation.

If any of the above circumstances apply the seller must give the buyer all the following additional information:

  • A statement of the estimated income and expenditure of the community corporation for the 12 months after the proposed settlement date.
  • Details of any disclosure the original subdivision owner must make to the community corporation (in relation to remuneration or other benefit arising from a contract, lease or licence entered into).
  • Details of any existing or proposed contract for the provision of services or amenities to the community corporation or its members, entered into or arranged by the original subdivision owner or by the community corporation. These include its terms and conditions, the consideration and the estimated costs to the members of the community corporation.

How this information should be provided to the buyer

There will be a separate seller disclosure form for community titles schemes that is clearly distinguished from the seller disclosure form created for a strata titles scheme.

A seller can comply with their disclosure requirements by giving the buyer a notice in the seller disclosure form or by including the information and statements in the contract to be signed by the buyer in the manner set out in the regulations.

It is the seller who must prove that the required information and statements were given in any court or tribunal proceedings connected with a contract for the sale and purchase of a lot.

What you need to know about notifiable variations

If certain changes (variations) occur after the buyer has signed a contract for the sale and purchase of a lot in a community titles scheme, the seller must give the buyer particulars of the variation by notice in writing.

These are called ‘notifiable variations’.

There are two types of notifiable variations

A type 1 notifiable variation

A type 1 notifiable variation means any of the following variations that occur after a contract for the sale and purchase of a lot in a community titles scheme is entered into, but before the settlement date for the contract:

  • The area or size of the lot or proposed lot is reduced by 5% or more from the area or size notified to the buyer before the buyer entered the contract.
  • The relative unit entitlement, or a reasonable estimate of the relative unit entitlement, of the lot is increased or decreased by 5% or more from the relative unit entitlement, or the estimate of the relative unit entitlement, of the lot notified to the buyer before the buyer entered into the contract. (Relative unit entitlement of a lot or tier parcel means the proportion that the unit entitlement of the lot or tier parcel bears to the sum of the unit entitlements of all the lots and tier parcels in the community titles scheme to which the lot or tier parcel belongs).
  • Anything relating to a proposal for the termination of the community titles scheme that is served on the seller by the community corporation.
  • Any other event classified by the regulations as a type 1 notifiable variation.

A type 2 notifiable variation

A type 2 notifiable variation means any of the following variations that occur after a contract for the sale and purchase of a lot in a community titles scheme is entered into but before the settlement date for the contract and that do not give rise to a type 1 notifiable variation:

  • The community development statement or proposed community development statement or amendment of the community development statement is modified.
  • The scheme plan, proposed scheme plan or amendment of the scheme plan, for the scheme or a community titles scheme to which the scheme belongs is modified in a way that affects the lot or the common property in which the owner of the lot has an undivided share.
  • The schedule of unit entitlements, proposed schedule of unit entitlements or amendment of the schedule of unit entitlements, for the scheme is modified in a way that affects the lot.
  • The scheme by-laws, proposed scheme by-laws for the scheme or a community titles scheme to which the scheme belongs, are modified.
  • The community corporation or original subdivision owner for the subdivision which created the lot does either of the following:
    • Enters a contract for the provision of services or amenities to the community corporation or to members of the community corporation, or a contract that is otherwise likely to affect the rights of the buyer.
    • Varies an existing contract of that kind in a way that is likely to affect the rights of the buyer.
  • A lease, licence, right or privilege over the common property in the community titles scheme or a community titles scheme to which the scheme belongs is granted or varied.
  • Any other event classified by the regulations as a type 2 notifiable variation.

The seller must give the buyer sufficient information about a notifiable variation

The seller must give the buyer details of the notifiable variation, that a reasonable person would consider sufficient to enable the buyer to make an adequately informed assessment as to whether they have been materially prejudiced by the variation.

If the seller becomes aware of a notifiable variation less than 15 working days before the settlement date, they must give the buyer a notice in writing about the variation as soon as practicable. In any other case the seller must notify the buyer no later than 10 working days after becoming aware of the variation.

In a court or tribunal proceeding that arises in relation to a notifiable variation which occurs after a contract is signed, it is the seller who must prove that proper notice in writing was given to the buyer.

Written notice of notifiable variations

The seller is not obliged to provide a written notice of a notifiable variation to the buyer where:

  • The contract has included a proposed action or a matter that would be a notifiable variation.
  • The action or matter when completed does not differ from that described in the contract.
  • The seller has given written notice to the buyer of completion of the action or matter with details that a reasonable person would consider sufficient to enable the buyer to make an adequately informed assessment as to whether the action or matter as completed, differs from that described in the contract.

If the seller becomes aware of completion of the action or matter less than 15 days before the settlement, they must give the notice of completion of the action or matter under the contract to the buyer as soon as practicable. In any other case, the notice of completion must be given no later than 10 working days after the seller becomes aware of completion of the action or matter.

Circumstances around a settlement delay or avoidance of contract

Delay in settlement

A buyer may, by written notice to the seller, postpone the settlement date for a contract of sale and purchase if the seller has not met their disclosure obligations in respect to information to be provided before and after the buyer signs the contract.
The buyer can postpone the settlement by no more than 15 working days after the latest date on which the seller complies with their disclosure obligations.

Avoidance of contract for failure to give the pre-contractual information to the buyer

The buyer may avoid a contract for the sale and purchase of a lot at any time before the settlement date if the seller fails to provide the buyer with the information required to be provided prior to signing the contract and if the information was now provided by the seller, it would disclose material prejudice to the buyer (proof of which lies on the buyer).

If the seller provides the buyer with the required pre-contractual information after the contract is signed but before the buyer avoids the contract, the buyer may still avoid the contract if the information provided disclosed material prejudice to the buyer and the buyer avoids the contract within 15 working days after the seller’s notice is given to the buyer.

Avoidance of contract on notice of notifiable variations

A buyer may avoid a contract for the sale and purchase of a lot at any time within 15 working days after the seller provides notice of a notifiable variation if the buyer is materially prejudiced by the variation (proof of which lies on the buyer) and the notifiable variation is not one to which section 131(4) of the Act applies.

Failure to disclose Type 1 variations

A buyer may avoid a contract for the sale and purchase of a lot at any time before the settlement date if a type 1 notifiable variation occurs and the seller does not notify the buyer of the variation within the timeframe required in the Act (no need to prove material prejudice).
If the seller provides the notice of the variation outside the timeframe required by the Act but before the buyer avoids the contract for non-disclosure of the type 1 notifiable variation, the buyer may still avoid the contract within 15 working days of the seller's notification.

Failure to disclose Type 2 variations

A buyer may avoid a contract for the sale and purchase of a lot at any time before the settlement date if a type 2 notifiable variation occurs and the following apply:

  • The seller does not notify the buyer of the variation within the timeframe required in the Act.
  • If the notice was to be provided by the seller, the buyer would receive information or a document that would disclose material prejudice to them (proof of which lies on the buyer).

If the seller provides the notice of the variation outside the timeframe required by the Act but before the buyer avoids the contract for non-disclosure of the type 2 notifiable variation, the buyer may still avoid the contract within 15 working days of the seller's notification.

Buyer’s obligation when avoiding a contract

The buyer’s notice of avoidance of a contract for the sale and purchase of a lot must be given in writing to the seller and specify the grounds on which the contract is avoided, including details of the material prejudice to the buyer, where that is required as grounds for avoidance.

Effect of avoidance of contract

Where a contract is avoided the buyer may recover from the seller as a debt any money paid by the buyer under the contract. Any person holding a deposit or other money for the contract on behalf of the buyer must repay that money to the buyer less any amount due to the seller for rent while the buyer occupied or was otherwise entitled to profits of the lot.

Contracting out of the buyer protection provisions provided under the Act is prohibited and any purported waiver of a right, remedy or benefit conferred on the buyer under these buyer protection provisions is of no effect.

Deposits associated with buying off-the-plan

Where a buyer is entering into a contract for the sale and purchase of a lot in a community titles scheme, before the lot is created by the registration of either the scheme or an amendment of the scheme, the contract must:

  • Require any deposit or other amount payable by the buyer prior to registration of the scheme or scheme amendment to be paid to an Australian legal practitioner, real estate agent or settlement agent to be held on trust for the buyer until the scheme is registered.
  • Specify the practitioner or agent to whom payment is to be made and how payment is to be made.

The buyer may avoid the contract at any time before registration of the scheme or a scheme amendment if the contract does not comply with the above requirements. The buyer may also avoid the contract if the lot is not created within a period after the date of the contract, agreed to by the buyer and seller in writing. In the absence of such agreement, within 6 months after the date of the contract.

Obtaining information from the community corporation

A buyer who has entered into a contract for the sale and purchase of a lot in a community titles scheme or a related community titles scheme is classified under section 94 of the Act as a person who has a proper interest in information about a community titles scheme.

As such, a buyer can make a written application under section 94 of the Act to the community corporation to:

  • Receive information under section 95 of the Act.
  • Inspect material under section 96 of the Act
  • Receive a certificate under section 97 of the Act.

A community corporation may charge a fee for an application for information, but that fee must not exceed an amount fixed by the regulations.