Vendors - be alarmed: new legislation on smoking alarms in residential properties

This Bartier Bulletin looks at the Conveyancing (Sale of Land) Amendment (Smoke Alarms) Regulation 2006 (Conveyancing Regulation) and the additional requirement it places (or will place) on vendors of real estate "where persons sleep".

The Conveyancing Regulation

The Regulation was published in the Government Gazette of 28 April 2006 and came into effect from 1 May 2006.

The explanatory note to the Conveyancing Regulation says its object is:

• to require the vendor to attach to a contract for sale a statement that any building on the land complies with the obligation to install smoke alarms (or in certain cases heat alarms).

Failure to attach the statement will be a ground for rescission by a purchaser, but the attachment of an inaccurate statement does not give the purchaser the right to rescind. A vendor who attaches a statement they know is incorrect is guilty of an offence carrying a maximum penalty of 5 penalty units (currently $550.00).

The EPA Regulation

The Environmental Planning and Assessment Amendment (Smoke Alarms) Regulation 2006 (EPA Regulation) also commenced on 1 May 2006 but provides a 6 month moratorium for failing to install smoke alarms within certain buildings.

Owners of existing buildings and dwellings must ensure smoke alarms are installed except:

• in buildings where smoke alarms are required to be installed under the EP & A Act or any other Act or law (including development consent)
• in those parts of the buildings occupied by a public authority, but only if the Minister responsible for the public authority has determined by order published in the Government Gazette that those parts of the building are not subject to the regulation, and
• in buildings in which no person sleeps.

A smoke alarm installed under the EPA Regulation is to be functioning and comply with the requirements of Australian Standard AS3786-1993 Smoke Alarms.

Despite the above standard, in the case of smoke alarms for boarding houses, hostels, backpacker accommodation, bed & breakfast, guest houses, residential parts of hotels, motels, schools, health care buildings, detention centres, nursing homes and hospitals there is an additional requirement that the alarm must be powered by:

(a) direct wiring to electricity supply; or

(b) a non-removable battery with a minimum 10 year life expectancy.

What does this mean?

The EPA Regulation provides that a legal obligation to install a smoke alarm does not arise until six months after commencement of the regulation. If the Conveyancing Regulation is read literally, there is no obligation to attach smoke alarm statements to contracts until 1 November 2006 as the obligation to install smoke alarms under the EPA Regulation does not arise until that date. The Department of Lands supports this interpretation, though many vendors and their lawyers will take the view that it is prudent to attach alarm statements prior to 1 November to avoid argument.

Section 52A of the Conveyancing Act 1999 prevents the parties from "contracting out" of the provisions. Also, the effect of s52A is that if the vendor does not attach the statement the purchaser must exercise the right of rescission within 14 days from exchange of contracts.

The effect of not attaching the statement will give another possible ground for purchasers to walk away from recently exchanged contracts.

The true extent of both regulations will be tested over time. It clearly raises some questions, for example, in buildings where no person sleeps, does that include:

• the cottage which is vacant when contracts are exchanged or
• the disused scout hall which is zoned residential and already has a kitchen and shower and could easily be converted to a place where a person sleeps?

If there is doubt whether the regulations apply, vendors would be well advised to adopt a cautious approach.

What should vendors do to protect their position?

For the time being vendors should:

• Install and maintain smoke alarms in accordance with Australian Standard AS3786-1993 or for certain buildings either direct wire or install an alarm with a non-removable 10 year battery.
• In contracts exchanged on or after 1 November 2006, include a separate statement that any relevant building on the land complies with the obligation to install smoke alarms.

Where compliance is not an issue it may be prudent to include the statement in contracts now, ahead of when the legal obligation to do so will arise.

For further information visit www.planning.nsw.gov.au or telephone the Department of Planning's Smoke Alarm Helpline on 1300 858 812.