When selling an apartment in New Zealand, particularly one under a Body Corporate, it’s essential to understand your pre-settlement disclosure obligations. These disclosures are critical for ensuring a smooth sale process and preventing potential delays or cancellations. Here’s a detailed guide on why the Pre-Settlement Disclosure Statement (PSDS) is essential, what it must include, and how missing this step can impact your sale.

What is a Pre-Settlement Disclosure Statement?

A Pre-Settlement Disclosure Statement (PSDS) is a document that apartment owners must provide to potential buyers, giving them specific details about financial obligations and Body Corporate commitments associated with the property. This document must be issued at least five working days before the agreed-upon settlement date. Failing to provide the PSDS on time can give the buyer grounds to delay settlement, or in some cases, even cancel the agreement.

Consider the case of a young apartment owner who was caught off guard by a delay in settlement. Having agreed to an earlier settlement date, she forgot to notify the individual responsible for managing the Body Corporate’s disclosure statements, resulting in the PSDS not being issued on time. This oversight led to a delay that impacted her ability to settle on another property she was purchasing. Had the disclosure been managed properly, she could have avoided this costly delay.

Key Information to Include in a PSDS

A PSDS must be accurate and comprehensive, and it requires a certificate from the Body Corporate to confirm its accuracy. It also requires an insurance certificate from the Body Corporate’s insurer. The following information should be included in the PSDS:

1. Property and Body Corporate Details

   • Unit number and Body Corporate number.

2. Levy and Payment Information

   • Amount and period of the Body Corporate levy under section 121 of the Unit Titles Act.
   • Payment schedule and due date for the levy.
   • Details of any unpaid levies, including amounts and any legal actions taken for non-payment.

3. Metered Charges and Repair Costs

   • Information on any unpaid metered charges or repair costs for the unit.

4. Interest and Legal Proceedings

   • Interest rate on outstanding amounts owed to the Body Corporate.
   • Pending legal proceedings involving the Body Corporate, both as plaintiff and defendant.
   • Any unresolved claims by the Body Corporate against third parties.

5. Changes to Operational Rules

   • Any updates to Body Corporate operational rules since the Pre-Contract Disclosure Statement.

Importance of Timely and Accurate Disclosure

For sellers, it’s crucial to remember that the PSDS must be provided to the buyer at least five working days before settlement. This document not only informs the buyer of ongoing costs but also allows the seller’s lawyer to appropriately allocate Body Corporate fees in the final settlement. Missing or inaccurate information in the PSDS could give the buyer legal grounds to cancel the contract or delay settlement, which can be particularly problematic if you have dependent financial transactions or deadlines.

Seeking Legal Guidance for PSDS Compliance

To avoid the risk of delays or cancellations, consult a legal professional for advice on preparing and issuing the PSDS. Ensuring the document is thorough and accurate will protect you and smoothen the sale process, allowing you to confidently complete the transaction.

At Core Legal in Wellington, our property law team is here to guide you through the disclosure process and answer your questions about Body Corporate obligations. Don’t let an overlooked PSDS disrupt your sale—reach out to us to safeguard your interests and navigate your property transaction with peace of mind.