Conveyancing – what’s new?

The Conveyancing (Sale of Land) Regulation 2022 (2022 Regulation) commenced on 1 September 2022 and has now replaced the Conveyancing (Sale of Land) Regulation 2017 (2017 Regulation). 

There will be a 6-month transitional period from 1 September 2022 until 28 February 2023. During this period, anything done in compliance with the 2017 Regulation will be taken to comply with the 2022 Regulation.

The purpose of the 2022 Regulation is to set out the:

• disclosure obligations of vendors in conveyancing transactions; and

• rights and remedies of purchasers when those disclosure obligations have not been complied with.

The purpose has not changed since the 2017 Regulation. What has changed – is set out below.

Off the plan contracts – changes in 2019

An off the plan contract is a contract for the sale of a residential lot that has not been created at the time the contract is entered into. In 2019, the Conveyancing Act 1919 and the Real Property Act 1900 were amended to include additional disclosure obligations on vendors under off the plan contracts. Vendors now need to attach a Disclosure Statement to the contract which sets out key information like the sunset date and other conditional events. The Disclosure Statement must also annex documents such as a copy of the draft plan prepared by a surveyor, a draft floor plan, schedule of finishes and draft by-laws.

Despite the 2019 changes to the legislation, the additional disclosure requirements were not added to the relevant regulations until now.

Off the plan contracts – changes in 2022

Schedule 1, Part 2 of the 2022 Regulation sets out the additional disclosure requirements of vendors in off the plan sale contracts, including (where applicable):

• draft building management statement;

• draft strata management statement;

• proposed schedule of finishes; and

• draft by-laws.

Options and cooling off periods

A put and call option deed is an agreement where one party agrees to sell a property if requested by the buyer (a call option) and the other party agrees to buy the same property if requested by the seller (a put option).

When you purchase residential property in NSW, you have a 5-business day cooling off period after you exchange contracts. Section 66T(d) of the Conveyancing Act 1919 makes it clear that a cooling off period does not apply in contracts arising from a call option. However, whether contracts arising from the exercise of a put option attract cooling off rights has always been a grey area.

In the recent case of BP7 Pty Ltd v Gavancorp Pty Ltd [2021] NSWSC 265, the NSW Supreme Court held that:

• A contract arising from the exercise of a put option was not contemplated by section 66T(d) of the Conveyancing Act 1919;

• The exemption did not apply; and

• The purchasers were entitled to cooling off rights – which they exercised.

Parliament was quick to respond on the issue. The 2022 Regulation now includes r17(3) which exempts contracts arising from the exercise of a put option from the cooling off provisions. This means that cooling off rights do not apply to a contract “made in consequence of the exercise of an option to compel the purchase of land”.

Purchasers’ remedies

Part 5 of the 2022 Regulation is a refreshing addition that clearly sets out the circumstances under which a purchaser may rescind a contract or option and provides a regime for the recission. 

The circumstances under which a purchaser may rescind include:

• where the vendor has failed to attach the prescribed documents;

• where the vendor in an off the plan contract has failed to attach the disclosure statement; and

• for a breach of warranty by the vendor under the Conveyancing Act 1919.

Conclusion

The Regulation brings welcome clarification and certainty regarding the vendor disclosure obligations and vendor warranties already in existence in the various pieces of legislation that govern the conveyance of land in NSW.

In addition, the 2022 Regulation has also been updated to modernise language and remove outdated references.

Author: Julia Yassa

Contributing partner: Andrew Grima