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Changes to the Sale of Land Act Anne Nielsen, Consultant Diane Ridgway, Senior Associate Russell Kennedy Tuesday 21 October 2014 3811787v2 PROPERTY LOCAL GOVERNMENT SEMINAR
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Changes to the Sale of Land Act
Anne Nielsen, Consultant Diane Ridgway, Senior Associate
Russell Kennedy
Tuesday 21 October 2014
3811787v2
PROPERTY LOCAL GOVERNMENT SEMINAR
ANNE NIELSEN
• To:
• alert you to the new requirements for vendor's statements resulting from changes made to section 32 of the Sale of Land Act 1962 ("SL Act") that are effective from 1 October 2014
• explain the transitional provisions that apply to vendor's statements after 1 October 2014
• explain the new requirement for a due diligence checklist to be provided to purchasers of residential properties (including vacant land)
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Purpose of this presentation
• State Government's cutting red tape initiative
• 31 October 2012 – Consumer Affairs Victoria ("CAV") discussion paper
• CAV paper Review of section 32 of the Sale of Land Act 1962 options contains 3 different options for reviewing section 32
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The New Section 32
• Sale of Land Amendment Act 2014
• Royal Assent 13 May 2014
• Commencement date 1 October 2014
• New title for a vendor's statement – Section 32 statement
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The New Section 32 (cont)
•Using old vendor's statements
• "old section 32" – version of section 32 which was in force immediately before the commencement day
• How will I recognise an old vendor's statement?
Do old vendor’s statements have to be updated?
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• Look for the following warning and important notices:
•Important notice to purchasers:
The use to which you propose to put the property may be prohibited by planning or building controls applying to the locality or may require the consent or permit of the municipal council or other responsible authority. It is in your interest to undertake a proper investigation of permitted land use before you commit yourself to buy.
Do old vendor’s statements have to be updated? (cont)
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•Further important notice to purchasers:
The property may be located in an area where commercial agricultural production activity may affect your enjoyment of the property. It is therefore in your interest to undertake an investigation of the possible amenity and other impacts from nearby properties and the agricultural practices and processes conducted there.
Do old vendor’s statements have to be updated? (cont)
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•Warning
Where any of the above services are described as not being connected to the property, the purchaser should check with the appropriate authorities as to their availability and the cost of providing them.
Do old vendor’s statements have to be updated? (cont)
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• There may also be a warning that the purchaser may be liable to pay a growth areas infrastructure contribution ("GAIC") in the old section 32 - sometimes this is not included if the property is not liable for GAIC.
• If the vendor's statement is signed and dated before 1 October 2014 it can continue to be used if the property remains for sale.
Do old vendor’s statements have to be updated? (cont)
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•When old vendor's statements can be used
• New s52(2): old section 32 can continue to be used if:
"(a) before the commencement day, a statement or statements under old section 32 have been prepared and the vendor has signed that statement or statements; and
(b) on and after the commencement day that land remains for sale."
Do old vendor’s statements have to be updated? (cont)
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•Updating or amending old vendor's statements
• Can amend or update vendor’s statements prepared under old section 32 if s52(2) applies.
• How should such a statement be updated or amended to show it was an old section 32 statement?
Do old vendor’s statements have to be updated? (cont)
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• Only one vendor’s statement required from 1 October 2014 even if an old section 32 statement
• New form of vendor's statement required if:
• land withdrawn from sale and re-offered for sale after 1 October 2014 or
• old section 32 statement not signed by vendor before 1 October 2014 (ensure it is dated)
• Vendor can sign vendor's statement electronically
New vendor's statements
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• After 1 October 2014 must provide due diligence checklist if selling:
• vacant residential land, or
• land on which there is a residence
(Residential Land)
"vacant residential land" is
"any vacant land on which the building of a residence is permitted."
The Due Diligence Checklist
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• If there is a no selling agent the vendor must provide the due diligence checklist. Examples of when this is likely to apply:
• Sales of discontinued roads or former reserves to adjoining owners (probably vacant residential land if zoning would permit construction of a residence)
• Sales of residential land where Council has already identified a buyer, perhaps as a result of an expression of interest process
The Due Diligence Checklist (cont)
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• Agents (or vendors if no agent), not lawyers, must provide checklist – attaching it to a vendor's statement does not comply with new s33B SL Act.
• Checklist must be made available from the time the land is offered for sale
Penalty – 60 penalty units
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The Due Diligence Checklist (cont)
• Checklist must be in form approved by Director of CAV
Penalty – 60 penalty units
•Where can I get a copy of the checklist?
• Approved checklist must be published on CAV's website – it is now available via the following link:http://consumer.vic.gov.au/duediligencechecklist
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The Due Diligence Checklist (cont)
•Agent must provide checklist
If licensed estate agent is acting for the vendor –
• agent must ensure that the approved form of checklist is made available to any prospective purchaser from the time the land is offered for sale
Penalty – 60 penalty units
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The Due Diligence Checklist (cont)
•How is checklist made available?
Checklist is made available if:
•copies are on display or offered to prospective purchasers at any inspection of the land, and
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The Due Diligence Checklist (cont)
• any Internet site "maintained by the vendor and any person acting as the licensed estate agent of the vendor where the land is offered for sale" allows access to a copy of the checklist either directly or via a link to another Internet site where this can be obtained
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The Due Diligence Checklist (cont)
•Why does website have to be maintained by vendor and estate agent?
•What happens if there is no agent and vendor uses a website not maintained by the vendor personally?
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The Due Diligence Checklist (cont)
• How do I recognise a new form vendor's statement?
The most noticeable changes are:
•Only disclose services which are NOT connected
•Planning overlays must be specified
•No warnings or notices
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The New Section 32
•Non-compliance and remedies
•Purchaser's right to rescind
• Purchasers retain the right to rescind any contract of sale entered into on basis that vendor has:
• supplied false information, or
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The New Section 32 (cont)
• failed to supply all of the information required, or
• failed to supply a vendor's statement (not specified in old section 32 but implied)
at any time before the purchaser accepts title and becomes entitled to possession or to the receipt of rents and profits
The New Section 32 (cont)
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•Court can excuse vendor's contravention
• Court can still excuse vendor for contravention if satisfied that
• vendor has acted honestly and reasonably and ought fairly to be excused, and
• purchaser is substantially in as good a position as if all of the relevant provisions had been complied with
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The New Section 32 (cont)
•Penalties• Pre October 2014 offence where
vendor supplies false information or fails to supply all requisite information retained but previous penalty in old section 32(6) of 50 penalty units increased as follows:
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The New Section 32 (cont)
• in the case of a body corporate – 300 penalty units ($44,283 based on the current penalty unit of $147.61 – this is variable and changes in 1 July each year)
• in any other case - 60 penalty units
• Also it is now an offence not to provide a vendor's statement at all
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The New Section 32 (cont)
• What if vendor wants to sell without entering into a contract of sale or providing a vendor's statement?
• You MUST NOT reach agreement on the sale in any correspondence – if you do:
• there is a contract that requires a vendor's statement and
• there is a risk of a penalty of 300 penalty units for a Council or Water Corporation
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The New Section 32 (cont)
•Purchaser can rescind if notice of compulsory acquisition given
• Purchaser retains right to rescind contract of sale at any time before accepting title and becoming entitled to possession or to the receipt of rents and profits if notice of intention to acquire under section 6 of the Land Acquisition and Compensation Act 1986 served in respect of land sold
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The New Section 32 (cont)
•No Contracting Out
•Repeats old section 32(8) – cannot contract out of vendor's statement requirements
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The New Section 32 (cont)
•Where vendor's statement is not required
• Vendor's statement not required where parties have entered into a contract for the sale of the same land in substantially the same terms and vendor previously provided a vendor's statement (old section 32(9))
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The New Section 32 (cont)
DIANE RIDGWAY
Changes to the Contract of Sale of Real Estate
• The form of contract prescribed by Estate Agents (Contracts) Regulations 2008 has been amended.
• The new form of contract must be used from 1 October 2014
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Estate Agents (Contracts) Amendment Regulations 2014
• The reference that the terms of the contract are contained in the attached vendor’s statement has been removed.
• The reference that the vendor’s statement is attached has been removed.
• The warning notice to purchasers of property who buy “off the plan” contracts has been inserted.
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Changes to Form 1
• References to "vendor’s statement" replaced with a reference to a "section 32 statement“.
• There is a new general condition 1.3.
• General condition 2.5 has been replaced with revised wording to take into account the reference to the new section 32 statement.
• General condition 7 which relates to "Release of Security Interests" under the Personal Property Securities Act 2009 (Cth) has been replaced and substantially revised.
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Changes to Form 2
• General condition 13 which deals with GST and a supply made in respect of land on which a farming business is carried on has been amended.
• General condition 17 which relates to service has been amended to allow for service by e-mail.
• General condition 18 in relation to nomination of substitute purchasers has been amended.
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Changes to Form 2 (cont)
• New form of contract still contains the vendor’s warranty at general condition 2.1.
• You must ensure that when preparing any contracts you use the new form of general conditions.
• There is also a new REIV/LIV copyright of contract identified as "copyright September 2014" which now includes these changes.
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Breach of vendor warranty
QUESTIONS
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The information contained in this presentation is intended as general commentary and should not be regarded as legal advice. Should you require specific advice on the topics or areas discussed please contact the presenter directly.
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Disclaimer
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Anne NielsenConsultant
Telephone: 9609 1651Email: [email protected]
Diane RidgwaySenior Associate
Telephone: 9609 1536Email: [email protected]
