Changes are on the horizon for contracts of "off the plan" sales.
The Conveyancing Legislation Amendment Bill 2018 has been introduced into Parliament and when enacted will amend the Conveyancing Act 1919 and the Real Property Act 1900 to prescribe certain terms in contracts for "off the plan" sales. The Bill is currently in the Legislative Assembly, awaiting the Minister's 2nd speech.
The key changes place disclosure obligations on vendors selling "off the plan" and provide more safeguards for purchasers. The amendments also drive the push to a 'paperless' and electronic conveyancing system.
Proposed changes are set out below:
- A disclosure statement will be attached to contracts for the sale and purchase of land before contracts are entered into.
- The disclosure statement will include a copy of the draft strata plan and other prescribed documents.
- Failure to annex the disclosure statement will constitute an offence and the purchaser will have contractual remedies to rescind the contract.
- If between exchange and completion the vendor becomes aware that the disclosure statement contains inaccuracies in a material particular, the vendor will be obliged to serve notice of those changes on the purchaser at least 21 days before completion of the contract. A material particular is a change to a draft plan or by-law, or any easement or covenant or any change to the schedule of finishes that will, or is likely to, adversely affect the use and enjoyment of the property.
- The purchaser will have rights to rescind the contract in certain circumstances where there is an inaccuracy in a material particular.
- The vendor will be obliged to serve a copy of the registered plan and any other document that was registered with the plan (such as a section 88B instrument) on the purchaser. The purchaser will not be obliged to complete the contact earlier than 21 days after receiving copies of these documents.
- The cooling off period under an off the plan contract will be extended from 5 to 10 business days. There will be legislative restrictions on the time by which a cooling off period under an off the plan contract can be shortened.
- Deposits paid under off the plan contracts will need to be held in a trust account (of the selling agent, solicitor or conveyancer). Deposits may be invested but cannot be released to the vendor before completion.
There are other amendments which will assist electronic conveyancing. Under the proposed changes, written instruments will be considered valid and binding even if they are electronically signed. Importantly, this will apply to all contracts for sale of land, deeds and leases.
These forthcoming changes serve as another reminder as to why it is important to get legal advice before entering into any contract for the sale and purchase of land.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.