QLD: Q&A How to handle sale conditions that require the body corporate to repair defects

This article discusses how to manage sale conditions requiring the body corporate to repair defects before settlement.

Question: What happens if a buyer makes settlement conditional on the body corporate fixing defects, but the repair costs exceed the committee’s spending limit?

If a prospective buyer makes it a condition of sale that the body corporate repair all defects it is responsible for before settlement, how is this managed when the repairs exceed the committee’s spending limit or require professional advice, such as from engineers? If an extraordinary general meeting (EGM) is required to approve such expenses, who pays for the EGM? What happens if the motion is voted down or delayed and the buyer withdraws as a result?

Where does this leave the seller? Can the seller take legal action against the body corporate for financial loss if the buyer pulls out or seeks compensation from the seller? Could the seller also sue the body corporate if they are forced to sell at a lower price due to the defects?

Answer: It would generally be unlikely that the buyer could take any action against the seller.

An EGM would be required to repair any defects but there is no specific right of the lot owner to have an EGM called. The starting position for who pays for the EGM is that the body corporate is responsible for the cost of an EGM but the committee may not agree to call the meeting unless the lot owner agreed to pay for these EGM costs.

Regarding the consequences if the motion is voted down or it takes too long to complete the transaction and the buyer terminates, this will depend on the terms of the contract between the buyer and seller.

Whether the owner can take legal action against the body corporate for financial loss depends on a number of specific circumstances to the issue. However, it would generally be unlikely that the buyer could take any action against the seller. Their rights are generally to terminate the contract.

Potentially, the owner could sue the body corporate if the prospective buyer negotiates a much lower price because of the defect, but there are a number of complicated factors that would need to be considered (and extensive material to be reviewed) to answer this question properly.

Todd Garsden
Mahoneys
E: tgarsden@mahoneys.com.au
P: 07 3007 3753

This post appears in the November 2025 edition of The QLD Strata Magazine.

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