Changes to the Sale of Land Act: Settlement agents bulletin issue 66 (March 2017)
14 March 2017
What you need to know
On 3 April 2017, the Sale of Land Amendment Act 2016 will come into effect in Western Australia. The legislation introduces greater protections for consumers when signing sales contracts for land not yet owned by a 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.
Under the new legislation:
- It will be 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.
- Time limits will be imposed on when the developer must 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.
- The developer will be required 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.
- The parties will have the right to terminate the contract if the conditions are not met or relevant notices are not given.
- Sales deposits will be required 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 and your staff are aware of the changes. You will need to check sales contracts to make sure the new laws are adhered to and will have an obligation to keep clients informed throughout the process.
You can find more information on the Landgate website.
Please note the CPD core activity ‘Managing risk in relation to legislative changes’ covers the amendment to the Sale of Land Act in relation to off-the-plan sales.
Share this page: