Amendments have been made to the Sale of Land Act that affects Sellers of real estate in Victoria and their real estate agents.
Changes as from 1 October 2014
Sale of Land Act amendments are due to come into effect as at 1 October 2014.
The amendments make changes to laws relating to Vendor’s Statements. The amended law:
- Changes the information required in a Vendor’s Statement;
- Changes some procedures relating to Vendor’s Statements; and
- Introduces a new concept being a Due Diligence Checklist.
Vendor’s Statement changes
- Warning notices contained in the Vendor’s Statements have been removed because of new requirements relating to Due Diligence Checklists – see below.
- Vendor’s Statements must now give details of any planning overlay that affects the relevant property.
- Vendor’s Statements now need only to give details of services not connected to the property.
- If the Owner’s Corporation affecting the property is inactive an Owners Corporation Certificate is not required and the Vendor’s Statement merely needs to state that the Owners Corporation is inactive.
From 1 October 2014 it will not be necessary to attach a copy of a Vendor’s Statement to Contracts of Sale.
Continued use of existing Vendor’s Statements
A Vendor’s Statement that complies with the amendments made to the Sale of Land Act is not required where a Vendor’s Statement was prepared and signed by a Vendor or on its behalf before 1 October 2014 and the relevant property was on the market for sale before 1 October 2014 and remains on the market for sale after that date.
Sellers of properties already on the market should therefore make sure existing Vendor’s Statements that are to be used in connection with the sale of properties are signed and dated before 1 October 2014. The information in those Vendor’s Statements must, as always, be current as at the date the Vendor’s Statement is given to a Buyer.
A Vendor’s Statement that complies with the amended Sale of Land Act will, however, be required if the relevant property is withdrawn from sale after 1 October 2014 and then put up for sale again at a later date.
Penalties for offences
A Buyer’s right to end the Contract before settlement because of the failure of a Seller to comply with its Vendor’s Statement obligations under the Act remain the same as they were before the Sale of Land Act was amended.
Under the amendments it is now, however, a specific offence to:
- Fail to give a Vendor’s Statement signed by a Vendor to a Buyer before a Buyer signs a Contract; and
- To knowingly or recklessly supply false information in a Vendor’s Statement or fail to supply all the information required to be in a Vendor’s Statement.
- The maximum penalties for failure to comply with these provisions of the Act are:
- 300 Penalty Units for corporations ($44,283.00 as at 1 October 2014); and
- 60 Penalty Units for everyone else ($8,856.60 as at 1 October 2014).
Due Diligence Checklist
A Due Diligence Checklist is required to be ‘made available’ to Buyers of:
- Land on which there is a residence; and
- Vacant residential land, (that is, vacant land on which the building of a residence is permitted).
Note the requirement is limited to Buyers of residences and vacant residential land as defined.
When must a Checklist be made available?
Sellers must ‘make available’ a Due Diligence Checklist to prospective Buyers from the time land is offered for sale.
A Seller is not required to do so if the Seller has engaged a licenced real estate agent to act for the Seller in the sale because the licenced real estate agent is then responsible to make sure that the Due Diligence Checklist is made available to prospective Buyers from the time the land is offered for sale.
Form of the Due Diligence Checklist
The form of Checklist must be approved by the Director of Consumer Affairs.
A copy of the approved Checklist can be obtained from the website of Consumer Affairs at: www.consumer.vic.gov.au/duediligencechecklist.
How is a Checklist to be ‘made available’?
A Due Diligence Checklist is to be ‘made available’ as follows:
- By display or by being offered to prospective Buyers at any inspection held of the relevant land; and
- By providing on any internet site maintained by a Seller or the Seller’s estate agent where the relevant property is offered for sale, access to a copy of the Checklist directly or by link to another site where a copy of the Checklist may be obtained – for example on the Consumer Affairs website.
Failure to make available a Checklist
Failure to make available the appropriate Checklist is an offence where a fine of 60 Penalty Units ($8,856.60 as at 1 October 2014) may be imposed.
A Buyer is not, however, given a right to end a Contract if a Checklist has not been made available.
For further information, please contact a member of our Property team on (03) 8600 8888.
Note: This update is a guide only and is not intended to constitute legal advice.