Statutory warranties in a body corporate relate to section 223 of the Body Corporate and Community Management Act 1997 (BCCM Act), the provision titled “Implied Warranties.”

A statutory warranty is a legally mandated guarantee established by law or specific state legislation. In Australia statutory warranties commonly aim at consumer protection and section 223 Implied Warranties are no different.

A statutory warranty cannot be opted out of which means that sellers are required to provide implied warranty information at time of sale.

Sales contracts, form 2 seller disclosure, and statutory warranties in a body corporate

In the Queensland purchase agreement for lots in a body corporate there is a separate section for Statutory Warranties and Contractual Rights. These additional questions are intended to disclose information related to section 223 of the BCCM Act.

It’s common to see the Statutory Warranties and Contractual Rights answered – “Refer to Form 2 Seller Disclosure Statement.” This is incorrect.

There is little in the form 2 seller disclosure statement about the body corporate and even less related to implied warranties.

A Form 2 Seller Disclosure Statement provides information from the seller to the buyer about certain matters relating to the lot.

Implied warranties, by contrast, relate to the common property and other body corporate matters. The only way to accurately provide this information is to review the body corporate records for the subject scheme.

Section 223 of the BCCM Act 1997 – Implied Warranties

When selling a lot in a body corporate the legislation creates a statutory warranty. The seller warrants to the buyer that there are no common property defects or expected liabilities in the common property, except those disclosed in the contract.

If the buyer discovers after the contract is entered that defects or prejudicial matters exist and were not disclosed, the buyer may terminate the contract for breach of warranty.

In sales contracts there are seven questions asking about different matters. They are:

1. Latent or patent defects in common property or body corporate assets — disclose issues such as a leaking window or roof, concrete spalling, or any identified problem in common property.
2. Actual, contingent or expected liabilities of the body corporate — disclose financial encumbrances beyond normal operating costs (for example, a proposed special levy).
3. Circumstances in relation to the affairs of the body corporate — disclose management problems such as an instable committee or records/finances in disarray.
4. Proposal to record a new Community Management Statement (CMS) — disclose any proposed changes to the CMS and these changes may alter owners rights and obligations.
5. Unapproved improvements on common property benefitting the lot — disclose things like an external air‑conditioning unit or a changed fence that were installed without approval of committee. The lot will be responsible for unapproved changes regardless of who made them.
6. Outstanding by‑law contravention notices — disclose unresolved by‑law breaches affecting the lot (for example, unresolved noise or parking notices).
7. Proposed body corporate resolutions — disclose pending motions that may relate to any of the above matters.

By answering all the above questions and attaching supporting documents, the seller makes full disclosure to the buyer.

How to complete statutory warranties in a body corporate

The most challenging area is latent or patent defects. “Latent” means hidden or underlying and includes issues that may emerge or develop later. For a body corporate, a small leak reported by one owner can escalate into a major defect requiring rooftop waterproofing replacement at considerable cost — a common real‑world example.

Our practical approach when completing implied warranty statements is to provide copies of currently reported matters: recent minutes, defect reports, correspondence and any commentary recorded in the scheme’s records. This approach:

• Records conditions as they were known at the time of disclosure; if a more concrete diagnosis appears later, the seller has already disclosed what was known at the time of the search.
• Allows the disclosure to be updated as further information becomes available during the listing period.
• Lets buyers read the source documents and draw their own conclusions about works being discussed.

It also speeds up sales because much of the body corporate information that would otherwise be provided in a pre‑purchase strata report is already available to the buyer.

That said, buyers should still obtain a pre‑purchase strata report unless they are very comfortable with body corporate matters. If you’re not it’s a good idea to get a strata professional read the documents and highlight issues that might become prejudicial.

Mybodycorpreport.com.au Implied Warranty Search and Statement

Statutory warranties in a body corporate (s.223 BCCM Act 1997) require sellers to disclose any known defects or prejudicial matters affecting common property and the body corporate’s financial position. A Form 2 Seller Disclosure Statement does not satisfy this obligation.

The most reliable way to answer the seven implied‑warranty questions is to provide buyers with the most recent and relevant body corporate documents so they can see exactly what is occurring within the scheme.

Our Implied Warranty Search and Statement does this for you. For $300, we conduct a professional search of the body corporate’s records, extract the documents that matter, and compile a clear, easy‑to‑attach disclosure statement that supports your contract answers and protects your sale.

If you want confidence, clarity, and a defensible disclosure pack, order your Implied Warranty Search and Statement today here.

This article provides general information only. It is not legal, financial, engineering or building advice. The circumstances of every body corporate are different. Obtain advice from an appropriately qualified professional where necessary.