Changes to the Sale of Land Act: Real estate bulletin issue 136 (March 2017)

This publication is for: 
Property industry

14 March 2017

What you need to know

On 3 April 2017, the Sale of Land Amendment Act 2016 (the Act) will come into effect in Western Australia.  The legislation introduces greater protections for consumers when signing sales contracts for land not yet owned by the developer. 

It is common practice for developers to sell a lot in a subdivision before they are the registered owner.  For example, a developer subdividing a parcel of land may sell lots before obtaining certificates of title for each one.  In the case of an apartment complex, a developer might sell units ‘off-the-plan’ before certificates of title are issued.

Changes to the Act, which will affect you and your clients in cases where the seller does not yet own the land, includes the following:

  • Making it mandatory for sellers to warn buyers in writing that the developer does not own the land.  If there is no warning, the sales contract becomes illegal and void.
  • Imposing time limits on when the developer can become the registered owner of the land. This will normally be a six month period or a specific date detailed in the sales contract. Contracts will become illegal and void if these time limits are not adhered to.
  •  Requiring the developer to make all reasonable endeavours to satisfy the vendor’s condition in the contract before the expiry of the period by which it must be satisfied. These reasonable endeavours include taking steps to obtain the necessary regulatory approvals and lodging the necessary plans for the subdivision or proposed subdivision.
  • Giving rights to the parties to terminate the contract if the conditions are not met or relevant notices are not given.
  • Requiring sales deposits to be held in an Australian trust account operated by an Australian legal practitioner, a real estate agent or a settlement agent.

It is important you make yourself aware of the implications of the changes to the Act so you can ensure you adhere to your obligations under the Code of Conduct in regard to acting with due care, diligence and skill and acting in the best interests of your client.

For more information on the Act visit the Landgate website

Please note the CPD mandatory activity 'Managing the risk of legislative change' covers the amendment to the Sale of Land Act in relation to off-the-plan sales.

Consumer Protection
Bulletin
Last updated 15 Mar 2017

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