Protection for Buyers: Will revision of the Unit Titles Act help?

We are all consumers in one way or another. In this country there is a significant emphasis on consumer protection when one buys a range of consumer products, whether it's an article of clothing or a car. There are a myriad of different statutes protecting the buying public, but what is there when they buy the most expensive item: a property? In real terms, at point of sale there is not a great deal of legislation protecting the buying public.

All is not lost, however. One piece of legislation - the Unit Titles Act 1972 - contains a spark of consumer protection. This Act applies to units which are generally apartments. Potential buyers can obtain a certificate which shows what levies are due to the Body Corporate and details matters such as how the Body Corporate may be sued or sue others. But the certificate does not reveal whether there are any proceedings in the pipeline, or whether any significant issues are being considered by the Body Corporate, such as deciding whether to paint the exterior of the building at a cost to each owner. So it is currently of limited benefit to the buyer.

Amendments to the Unit Titles Act are, however, under consideration by the Department of Building & Housing, and planned for presentation to Parliament in 2006. They include a new emphasis towards consumer protection which will, for the unit title sector of the property market at least, give buyers some measure of protection and ensure some form of disclosure before they buy. The market in Australia is far more sophisticated in terms of consumer protection for buying property than we are in New Zealand.

We should take a leaf out of the Queensland or even the Ontario legislation where consumer protection is a much more significant feature. The sort of issues that we expect the new legislation to include are:

Disclosure requirements of the new developer/the Body Corporate or the vendor.

Building certifications about structural or maintenance requirements of the building.

Statements about levies, paid and unpaid, and future maintenance levies.

Ability for the purchaser to withdraw from the contract if the disclosures are inadequate or demonstrate real problems with the building.

Special disclosure features for new buildings including details of any special management agreements that have been entered into.

These sorts of features will allow some element of consumer protection to find its way into the fabric of property ownership in this country, which is not a bad thing.

Tim Jones is a lawyer with Glaister Ennor.