Sale of Land Amendment Bill 2014
Introduction Print
EXPLANATORY MEMORANDUM
571357
BILL LA INTRODUCTION 4/2/2014
Clause Notes
PART 1—PRELIMINARY
Clause 1provides that the purposes of the Bill are to amend the Sale of Land Act 1962 to re-enact, reform and modernise the provisions relating to statements made under section 32 of that Act and to make related and consequential amendments to the Owners Corporations Act 2006 and to consequentially amend other Acts.
Clause 2provides for the commencement of the Bill.
Part 1 of the Bill (purposes and commencement provisions) will come into operation on the day after the day on which the Bill receives the Royal Assent. Amendments to regulation-making powers under the Owners Corporations Act 2006 made by clause 8 of Part 3 of the Bill will also come into operation on that day.
In accordance with clause 2(2), the remaining provisions of the Bill (i.e. Part 2, clause 7 in Part 3, Part 4 and Part 5) will come into operation on a day or days to be proclaimed. Deferring the commencement of Part 2 recognises that the legal profession and conveyancing industry require time to adapt to the changes to the Sale of Land Act 1962 contained in that Part.
As Part 4 of the Bill consequentially amends various Acts in line with the changes made by Part 2, it will come into operation on the same day as that Part.
Amendments to the Owners Corporations Act 2006 in clause 7 of Part 3 of the Bill are also deferred. These amendments will commence following a review of fees for the provision of owners corporation certificates.
Finally, the automatic repeal provision in Part 5 of the Bill will also come into operation on proclamation.
Should any of the provisions outlined above not come into operation before 1 July 2015, clause 2(3) provides for them to come into operation on that day.
PART 2—AMENDMENT OF SALE OF LAND ACT 1962
Clause 3amends section 30 of the Sale of Land Act 1962. Section 30 defines a number of terms for the purposes of Part II of that Act.
Clause 3(1) insertsa new definition of section 32 statement in section 30(1) of the Sale of Land Act 1962. This term is defined to mean a statement required to be given by a vendor under section 32 in accordance with Division 2 of Part II of the Sale of Land Act 1962.
Clause 3(2) repealsexisting definitions of metropolitan area and planning instrument in section 30(1) of the Sale of Land Act 1962. As a result of this Bill, there will no longer be a requirement, as there is currently under section 32, for a vendor to disclose that a planning instrument prohibits construction of a dwelling house on land located outside the "metropolitan area". Accordingly, this term is not required to be defined in section 30, as it has no application to any other provision of Part II of the Sale of Land Act 1962.
The definition of planning instrumentis repealed as a consequence of amendments to clarify the disclosure of planning information set out in new section 32C(d) in clause 4 of the Bill.
Clause 3(3) repealssection 30(3), (4) and (5) of the Sale of Land Act 1962. Section 30(3), (4) and (5) of the Sale of Land Act 1962 relates to Orders made by the Governor in Council in relation to the definition of metropolitan area which is being repealed by clause 3(1) of this Bill. As such, these subsections are consequentially repealed.
Clause 4substitutes Division 2 of Part II of the Sale of Land Act 1962 with a new Division 2 of Part II.
Division 2 of Part II currently comprises only one section: section 32, which sets out the disclosure requirements vendors must meet when selling land in Victoria.
New Division 2 of Part II comprises new sections 32 to 32P, each of which re-enacts (either with or without amendment) particular aspects of the existing section 32.
New section 32 re-enacts the current requirement for a vendor under a contract for the sale of land to give a purchaser a signed statement disclosing certain information about, and attaching certain documents in relation to, the land before the purchaser signs a contract for the sale of the land. The current obligation to include the statement in any (subsequent) contract for the sale of the land (existing section 32(1)(b) of the Sale of Land Act 1962) has not been re-enacted. This will ease the regulatory burden of section 32 of the Sale of Land Act 1962 and re-affirm that the focus of this Division is on ensuring that certain information is disclosed to a purchaser prior to the purchaser signing a contract for the sale of land.
New section 32A sets out the financial matters in respect of land that vendors are required to disclose in section 32 statements. Current disclosure requirements in relation to undischarged mortgages and charges over the land, as well as in relation to terms contracts, are re-enacted without amendment. The current requirement to disclose information about rates, taxes, charges and similar outgoings affecting the land is also re-enacted.
New section 32B re-enacts certain obligations on vendors to disclose insurance details. As is the case currently, new section32B provides that, where a contract for the sale of land does not provide for the land to remain at the vendor's risk until the purchaser is entitled to possession (or rents and profits), a vendor is required to disclose particulars of any insurance policy maintained by the vendor in respect of any damage to, or destruction of, the land. A vendor of land will also continue to be required to disclose particulars of any required insurance under the Building Act 1993 that applies to a residence (constructed within the preceding 6 years) on the land to which section 137B of the Building Act 1993 applies.
New section 32C details matters relating to land use that vendors are required to disclose to purchasers in section 32 statements. Current requirements in relation to the disclosure of easements, covenants and other similar restrictions affecting the land, and that there is no access to the property by road, are re-enacted. The requirement to state (where relevant) that land is in a bushfire prone area within the meaning of regulations made under the Building Act 1993 is also re-enacted, with an amendment to clarify that the requirement applies in respect of designated bushfire prone areas. Finally, in relation to land to which a planning scheme applies, new section 32C(d) requires vendors to disclose: the name of the planning scheme; the name of the responsible authority (i.e.relevant municipal council); the zoning of the land; and the name of any planning overlay affecting the land. New section 32C(d) updates and modernises existing requirements in relation to the disclosure of planning information.
New section 32D sets out notices made in respect of land that vendors are required to disclose in section 32 statements. Newsection 32D(a) requires vendors to disclose particulars of notices, orders, declarations, reports or recommendations, or approved proposals directly and currently affecting the land of which the vendor might reasonably be expected to have knowledge. This new paragraph substantially re-enacts an existing obligation under section 32, with amendments to limit a vendor's obligation to the disclosure of documents that directly and currently affect the land. Under new section 32D(a) vendors are not obliged to disclose the existence of historical documents where those documents do not have a continuing application to the land.
New section 32D(b) specifies disclosure obligations in relation to land contaminated by agricultural chemicals or affected by livestock disease by requiring vendors to disclose whether there are any notices, property management plans, reports or orders in respect of the land issued by a government department or public authority in relation to livestock disease or contamination by agricultural chemicals affecting the ongoing use of the land for agricultural purposes. A vendor's disclosure requirements under new section 32D(b) supplement the broader disclosure obligations in new section 32D(a).
An existing obligation on vendors to disclose particulars of any notice of intention to acquire served under section 6 of the LandAcquisition and Compensation Act 1986 is re-enacted (without amendment) in paragraph (c) of new section 32D.
New section 32E re-enacts an existing obligation on vendors of land on which there is a residence to disclose particulars of building permits issued under the Building Act 1993 in the preceding 7 years, in relation to a building on the land.
New section 32F details information relating to owners corporations required to be disclosed in section 32 statements. Currently, a vendor of land affected by an owners corporation (for example, an apartment, unit or townhouse) is required to obtain a current owners corporation certificate from the relevant owners corporation and attach a copy of that certificate to their statement under section 32 of the Sale of Land Act 1962, along with a copy of certain documents required to accompany an owners corporation certificate under the Owners Corporations Act 2006. New 32F(1)(a) enables vendors to fulfil their obligations to disclose information relating to an owners corporation affecting the land by (unless the owners corporation is inactive as defined by new section 32F(2)) either—
- specifying the information prescribed for the purposes of section 151(4)(a) of the Owners Corporations Act 2006 themselves in their section 32 statement; or
- attaching a copy of the current owners corporation certificate issued in respect of the land to their section32 statement.
In either case, vendors will also be required to supply copies of the documents required to accompany an owners corporation certificate under the Owners Corporations Act 2006 (new section 32F(1)(a)(ii)).
Enabling vendors to disclose information they may hold themselves, as an alternative to obtaining a certificate disclosing the same information, is consistent with other disclosures currently required under section 32 of the Sale of Land Act 1962, which can be effected either by a statement made by the vendor or through provision of a certificate. It also provides greater flexibility to vendors in complying with the requirement to disclose information about their owners corporation.
New section 32F also addresses circumstances in which an owners corporation is inactive (new section 32F(1)(b) and (2)). An inactive owners corporation is defined to include an owners corporation that has not in the previous 15 months had an annual general meeting and has not fixed any fees and has not held any insurance. This definition is inclusive to give vendors the flexibility to make the case that their owners corporation is inactive in circumstances other than those specifically set out in the definition.
Because it is expected that a vendor in a lot affected by an inactive owners corporation will be unable to either personally provide required particulars about the owners corporation in their section 32 statement, or obtain an owners corporation certificate from their owners corporation, new section 32F(1)(b) enables vendors of lots in inactive owners corporations to specify that theowners corporation is inactive in their section 32 statement. This ensures that a vendor is able to provide purchasers with accurate information about the status of the owners corporation affecting the lot for sale.
New section 32G re-enacts existing requirements on vendors to disclose certain information concerning land that is affected by a work-in-kind agreement (within the meaning of Part 9B of the Planning and Environment Act 1987), as well as requirements to provide certain certificates or notices in the case of land in respect of which there is a growth areas infrastructure contribution recording (also within the meaning of Part 9B of the Planning and Environment Act 1987).
New section 32H requires vendors of land to specify in their section 32 statements if certain essential services (namely, electricity, gas and water supply, sewerage and telephone services) are not connected to the land. Vendors will not be required, as is the case currently, to provide information about connected essential services.
New section 32I substantially re-enacts existing requirements on vendors to attach to their section 32 statements evidence of their title to the land, with amendments to bring the requirements into line with contemporary conveyancing practice.
Currently, vendors of land under the Transfer of Land Act 1958 are required to supply copies of their Certificate of Title to the land in their statements under section 32 of the Sale of Land Act 1962. New section 32I(a) replaces this obligation with a requirement to provide a copy of the Register Search Statement for the land. Vendors will also be required to supply a diagram of the location of the land as specified in the Register Search Statement.
Existing requirements on vendors of general law land to provide evidence of their title to the land have been re-enacted in new section 32I(b).
New section 32I(c) re-enacts a requirement on a vendor who is not the registered proprietor of the land or the owner of the estate in fee simple in the land to provide evidence of his or her right or power to sell the land.
New section 32I(d), (e) and (f) re-enact requirements to disclose information about subdivisions. New section 32I(d) requires a vendor to disclose subdivision plans that are yet to be registered, while new section 32I(e) re-enacts existing disclosure requirements for staged subdivisions. New section 32I(f) provides for disclosure requirements where there are plans (within the meaning of the Subdivision Act 1988) to amend or re-develop subdivided land, including consolidations.
New section 32J(1) provides that, if any information required in a section 32 statement is specified in a certificate, notice or other document issued by a relevant authority, a vendor may attach that certificate, notice or document to the section 32 statement for the purposes of complying with new Division 2 of Part II as substituted by clause 4. This new section re-enacts an existing provision in section 32, with adjustments to enable vendors to use certificates (or other documents) issued by relevant authorities to demonstrate compliance with any or all of the requirements of new Division 2 of Part II.
New section 32J(2) introduces a new capacity for a vendor, who is required by new section 32B to disclose insurance details in their section 32 statement, to attach a copy or extract of a policy of insurance that contains the relevant information to their section32 statement, for the purposes of complying with new section 32B.
New section 32K provides a purchaser under a contract for the sale of land with rescission rights in certain circumstances.
New section 32K(1) sets out the circumstances in which the rescission rights in section 32K(2) and (3) will apply, namely where a vendor—
- supplies false information to a purchaser in a section 32 statement, or any certificates, notices, policies or other documents required by Division 2 of Part II to be attached to a section 32 statement; or
- fails to supply all the information required to be supplied to a purchaser either in a section 32 statement or attached to the section 32 statement, as required by Division 2 of Part II; or
- fails to give a purchaser a section 32 statement signed by the vendor before the purchaser signs the contract for the sale of land.
New section 32K(2) substantially re-enacts existing section 32(5) of the Sale of Land Act 1962 enabling a purchaser to rescind any contract for the sale of land which has been entered into on the basis of information contained in the section 32 statement or attached to the section 32 statement at any time before the purchaser accepts title and becomes entitled to possession or to the receipt of rents and profits.
New section 32K(3) provides for a new right of rescission where a vendor fails to give the purchaser a section 32 statement before the purchaser signs the contract.
New section 32K(4) re-enacts existing limitations on a purchaser's rescission rights under section new 32K(2) and also applies those limitations to the new right to rescind under new section 32K(3). New section 32K(4) provides that a purchaser may not rescind a contract for the sale of land where the court is satisfied—
- that the vendor has acted honestly and reasonably, and ought fairly to be excused for the contravention; and
- the purchaser is substantially in as good a position as if all the relevant provisions of new Division 2 of Part II had been complied with.
New section 32L substantially re-enacts an existing offence provision (existing section 32(6) of the Sale of Land Act 1962) relating to the provision of false information, or failure to provide complete information, in a section 32 statement, with amendments to extend the provision to circumstances in which a vendor has failed to give a purchaser a section 32 statement before the purchaser has signed the relevant contract for the sale of land. The offence attracts a maximum penalty of 300 penalty units, in the case of a body corporate, and 60 penalty units in any other case. The penalty for an offence against new section 32L is greater than that for an offence against existing section 32(6) of the Sale of Land Act 1962 which is 50 penalty units. The new penalties are consistent with other penalties in the Sale of Land Act 1962.
New section 32M re-enacts an existing right available to a purchaser to rescind a contract for the sale of land, if, before the purchaser accepts title and becomes entitled to possession or to the receipt of rents and profits, a notice of intention to acquire land has been served under section 6 of the Land Acquisition and Compensation Act 1986 in respect of the land subject to the contract of sale.
New section 32N re-enacts, an existing provision confirming that a provision in a contract for the sale of land that excludes, modifies or restricts any provision of Division 2 of Part II of the Sale of Land Act 1962 is void and of no effect.
New section 32O re-enacts an existing provision which states that if a vendor and a purchaser have entered into a contract in respect of which a section 32 statement has been given, and the vendor and purchaser enter into a subsequent contract in substantially the same terms as the original contract, the vendor will not be required, in respect of the subsequent contract, to give the purchaser another section 32 statement.
New section 32P re-enacts an existing provision (section 32(11) of the Sale of Land Act 1962) that confirms that an agreement to transfer a forest carbon right within the meaning of the Climate Change Act 2010 is not a contract for the sale of land for the purposes of new Division 2 of Part II.
Clause 5inserts new Division 2A into Part II after Division 2 of Part II of the Sale of Land Act 1962. New Division 2A sets out new requirements relating to due diligence checklists.
New section 33 defines certain terms for the purposes of new Division 2A of Part II. The term licensed estate agent is defined to have the same meaning as in the Estate Agents Act 1980. The Estate Agents Act 1980 defines licensed estate agent to mean the holder of an estate agents licence. The term vacant residential land is defined to mean any vacant land on which the building of a residence is permitted. This is designed to ensure that vacant land (including land in agricultural or rural areas) is captured by the requirement to provide a due diligence checklist if the relevant planning scheme would enable a residence to be built on that land.