Beware of the changes to the Sale of Land Amendment Act!
New Rules for Vendors Statements/Section 32 Statements
The Sale of Land Amendment Act 2014 (“the SLAA”) was passed by Parliament on the 8th May, 2014 and proposes amendments to the Vendor’s Statement that is given by a Vendor of a property to a purchaser under Section 32 of the Sale of Land Act 1962 (“the Act”)
The amendments aim to simplify a Vendor’s disclosure obligations, reduce duplication and enhance consumer protections.
However, it seems unlikely that Vendors will adopt all of the new options offered by this Act.
As a result, the Act’s promised benefits may not result.
Furthermore, the Act does not address some of the deficiencies in consumer protection in the current requirements for Vendor’s Statements.
Q. What does the new Act change?
- No duplicate Vendor’s Statement attached to a Contract for Sale of LandThe Act removes the requirement for a copy of the Vendor’s Statement to be attached to a Contract for Sale of land.A Vendor will still be required to give a signed Vendor’s Statement to the purchaser before the purchaser signs a Contract for Sale (otherwise the Purchaser can terminate the Contract), but the current requirement that a copy of the Vendor’s Statement be attached to the contract for sale will be discontinued.
- Electronic SignaturesVendors will be permitted to sign the Vendor’s Statement electronically.This proposal makes it easier for Vendors to sign statements and may reduce time delays.
- Re-instatement of current requirements with some variationsThe Act re-enacts many of the existing requirements under Section 32 with some changes.It is important for Vendors to familiarise themselves with these new requirements so they give a correct Vendor’s Statement under the Act.
Some of the main changes are.
(a) While the Act retains the existing disclosure requirements in relation to planning law, it also requires Vendors to disclose the name of any planning scheme overlay affecting the land.
(b) A Vendor will only have to disclose notices, orders and declarations and that directly and currently affect the land. This confirms that there is no need to include historical documents that do not currently apply to the land.
In some circumstances it may be difficult to assess what currently affect the land, with the result that a cautious Vendor may still include some historical information. For example it is sometimes difficult to quickly determine if a planning permit is current and in effect.
The inclusion in the Act of other qualifications that the notice, order or proposal to be disclosed is to be one which “directly” affects the land is difficult to interpret (and will require Judicial interpretation.)
Q: Does this mean that a Vendor will not be obliged to disclose a planning permit issued for a development of a neighbouring property which development may overlook or cast a shadow over the land?
A: Yes, but a cautious Vendor will continue to include that information if the Act is proclaimed unamended and until the courts decide otherwise.
(c) The Act requires disclosure of notices and reports relating to livestock disease or contamination by agricultural chemicals that affect the ongoing use of the land for agricultural purposes.
- Agent to supply and make available a Due Diligence ChecklistThe selling agent must both (a) supply (i.e. display/offer to Purchasers) and (b) make available for a prospective Purchaser to view on the website where the land is offered for sale to Purchasers of residential property a due diligence check list (replacing the warning notices that are currently being given to purchasers in Section 32s). The Purchaser is not required to acknowledge or sign the due diligence check list.
- Services – change of disclosure obligationsServices that are NOT connected must be disclosed and the name of the supply authority does not need to be given.
- InsuranceIf the contract for the sale of the land does not provide for the land to remain at the risk of the vendor until the purchaser becomes entitled to possession or receipt of rents and profits, particulars of any policy of insurance maintained by the vendor in respect of any damage to or destruction of the land must be disclosed in the Section 32 Vendor’s Statement 1962;
- Owners’ Corporations(a) The Vendor does not need to attach Owners’ Corporation Certificates (OCC) to a Section 32 but the Vendor must specify the information required by the Owners’ Corporation Certificate in the Section 32.(b) The Section 32 must specify if an Owners’ Corporation is “inactive” (this is a new term defined by the Sale of Act 1962.)
- Transitional provisionsAccordingly, at present nothing needs to be done because nothing has changed in respect of the existing 32’s or Vendor’s Statements which remain valid until the Sale of Land Amendment Act 2014 commences and while the land remains for sale. It commences on the 1st October, 2014. The prudent course is to prepare new Section 32 Statements after that date.
We shall provide further updates regarding proposed changes to laws relating to Vendor’s Statements when we become aware of these changes.