Property developers, purchasers and sellers should be aware of changes to property laws which came into effect in December 2014.
These changes affect anyone who buys or sells property off-the-plan.
The changes affect both the sale of lots in Community Titles Schemes (apartments, townhouses etc) and land subdivisions. There are additional changes to the way property transactions are conducted and the rules regulating real estate agents. If you require further information on these changes please contact our office.
The changes have been described by The Property Council as providing “significant wins for the property industry including modernised legislation that minimises the impost on the seller through reduced legal, disclosure and reporting requirements”.
The changes have reduced “red tape” and will save the property industry significant money in the long term.
Sale of proposed lots in Community Titles Schemes
The Body Corporate and Community Management Act will now apply to:
- Sales of proposed lots in a community title or group title scheme; and
- All disclosure requirements for the sale of those lots.
These were previously contained in the Land Sales Act.
An overview of the key features is set out below:
Sellers can now require buyers to pay deposits of up to 20% of the purchase price for off-the-plan sales, without the risk of the deposit being regarded as a penalty and without the contract becoming an instalment contract.
Deposits must be held in the trust account of a solicitor or real estate agent.
The solicitor or real estate agent is able to release the deposit if the parties are in dispute, provided prior notice is given of its intention to pay the deposit to the buyer/seller. The seller/buyer then has at least 60 days to commence legal action.
Developers cannot pay expression of interest monies into their own bank accounts. They must be paid to the trust account of a solicitor or real estate agent.
Parties to a contract for the sale of a lot in a Community Titles Scheme can now agree on their own timeframes for when the seller must give the buyer a registrable transfer (sunset date), as long as the agreed timeframe does not exceed 5½ years from the contract date (extended from 3½ years).
If there is no sunset date specified in the contract then a prescribed sunset date of 3½ years will apply. Buyers will continue to have the right to terminate the contract if the registrable transfer is not supplied to them by the sunset date.
Bank guarantees can be given as security for deposit payments.
The solicitor or real estate agent must keep the bank guarantee until required by law or under the terms of the contract.
If the bank guarantee is called upon the solicitor or real estate agent must deal with the guarantee in the same way as trust money, and pay the proceeds into a trust account.
Sale of proposed lots – land
There is no longer a restriction on selling land where a development approval for the proposed development has not yet been obtained.
Disclosure requirements – options
The prescribed disclosure documentation is not required to be provided if the same parties to an option agreement enter into a contract for the sale of the same parcel of land, or lot in a Community Titles Scheme, as contained in the option agreement.
Disclosure statement to prospective buyer
Sellers are required to provide buyers of a proposed parcel of land or lot in a Community Titles Scheme with a disclosure statement and plan.
The disclosure plans must be prepared by a cadastral surveyor. Architectural plans will no longer be sufficient to meet the new disclosure requirements for plans.
Changes to disclosure plans must also be prepared by a cadastral surveyor. Notice must be provided of the changes at least 21 days before settlement and the changes must be explained in plain English.
Any buyer which is “materially prejudiced” by the changes has the right to terminate the contract by written notice to the seller within 21 days, the onus is on the buyer to prove they have been “materially prejudiced”.
If there are operational works for standard format lots, additional detail is required, such as contour levels, the height and depth of retaining walls and further disclosure about any proposed building must be given to the buyer.
Exemption for sales arising from subdivision into not more than five lots
There are no prescribed disclosure requirements for the sale of proposed lots in a subdivision of five lots or less.
This will streamline the sale of small scale subdivisions as an exemption previously had to be applied for.
There have also been significant changes to the way property transactions are documented with the Property Agents and Motor Dealers Act being abolished and replaced by the Property Occupations Act.
The changes to the law mean that great care needs to be taken in the preparation of contracts and or if you are considering buying property off-the-plan. If you need help with an off-the-plan conveyancing matter or would like more information please contact us on 07 4927 9477 or email [email protected]