Conveyancing Legislation Amendment Bill 2018 – Paperless settlements, protections for purchasers and increased obligations for vendors
Amendments to the Conveyancing Act 1919 and the Real Property Act 1900 commenced in late 2018 with further amendments to off the plan contract disclosure requirements and purchaser rights expected to commence mid 2019. These amendments introduce additional vendor disclosure requirements in relation to off the plan contracts and support the transition to paperless conveyancing.
Off-the-plan contracts
An off-the-plan contract is used to sell property that does not exist at the time the contracts are signed. The new legislation aims to provide further protection for purchasers by setting new minimum standards of vendor disclosure, increasing rights of rescission for purchasers and providing remedies where the final property differs from what was agreed to.
Vendor obligations
The new provisions increase the disclosure obligations of vendors. New obligations include the requirement to provide purchasers with a disclosure statement before entering into the contract. This disclosure statement must include key documents such as a copy of the proposed strata plan. Other disclosures include proposed easements and covenants, proposed by-laws for strata properties and where building work is required as part of the contract, a schedule of finishes. If the vendor becomes aware that the disclosure statement was inaccurate at the time of entry into the contract or has since become inaccurate, they must provide the purchaser with a notice of changes at least 21 days before completion.
It is important to note that many developers are already providing a high level of disclosure in their off the plan contracts, attaching the proposed strata plan prepared by a surveyor, the proposed management statement and strata by-laws, a draft section 88B instrument creating easements etc and a schedule of inclusions. For these developers, the new legislation is not likely to have too much of an impact on their disclosure practices.
Rights of the purchaser
The new provisions increase the protections provided to the purchaser. New protections include an extended cooling-off period of 10 business days for off-the-plan purchases and additional rights of rescission for ‘material particular’ changes made after exchange. A ‘material particular’ includes a change to the draft plan of a subdivision, a provision of draft by-laws, an easement or covenant or the schedule of finishes in respect of the property that will, or is likely to, adversely affect the purchaser’s use or enjoyment of the property.
Rescission by vendor
Another key change to the legislation is the closure of a sunset date rescission ‘loophole’. Previously, legislation did not allow vendors to rescind a contract (without the consent of the purchaser) if they failed to meet the sunset date deadline for registration of plans of subdivision, but did allow rescission if an occupation certificate was not obtained by the sunset date.
Electronic conveyancing
Previously, a fully electronic conveyancing process was not possible due to legislative obstacles. Changes to the Conveyancing Act 1919 and Real Property Act 1900 have removed these obstacles, allowing a completely electronic conveyancing process, from contract through to settlement.
The amendments provide certainty around the previously contentious issue of the electronic exchange of contracts. It confirms that land contracts can be formed electronically and, importantly, that the traditional requirement for land contracts to be in writing can be satisfied electronically. Documents required to be attached to the contract, such as vendor disclosure requirements, can now also be in electronic form.
The new legislation also extends to the electronic service of notices, deeds and registry instruments. Instead of using antiquated forms of service such as facsimile or personal service, service is now permitted by email to an address specified by the individual who is to be served the notice. All forms of deeds, not only those relating to land, can now be signed and witnessed electronically. Registry instruments, such as a mortgage, when lodged for registration, may now also have any supporting documents signed electronically.
If you would like to discuss the implications of any of the new Conveyancing Act 1919 or Real Property Act 1900 provisions, for example vendor disclosure requirements for off-the-plan contracts, please contact our office.