Overview to 2022 NSW Contract for Sale and Purchase of Land
The NSW government recently introduced the Conveyancing (Sale of Land) Regulation 2022 (NSW) (2022 Regulation) to replace the existing Conveyancing (Sale of Land) Regulation 2017 (NSW) (2017 Regulation) and makes minor changes to the NSW Contract for Sale of Land. The 2022 Regulation otherwise supports and remains in line with the Conveyancing Act 1919 (NSW).
The 2022 Regulation commenced on 1 September 2022, however there is a six-month transition period in place which ends on 28 February 2022, to account for circumstances where contracts were prepared before the commencement date and exchanged thereafter. During the transition period, Contracts prepared in accordance with the 2017 Regulation will also comply with the 2022 Regulation.
Some of the changes that have been made in relation to the sale and purchase of land in New South Wales are:
1. Structure and readability
The 2022 Regulation itself is more “user friendly” than ever before. The language has been modernised and all definitions can be found in a single dictionary. Outdated references to legislation have also been removed, including in relation to the prescribed form of “cooling off” notices.
2. Prescribed documents for off-the-plan contracts
The 2022 Regulations offers more protection for purchasers who are buying property that is “off the plan”, as vendors have additional disclosure requirements under the 2022 Regulation, where “off the plan” contracts must include a Disclosure Statement that sets out key dates in addition to the following annexures:
a proposed schedule of finishes;
draft plan;
draft strata by-laws;
draft strata management statement;
draft strata development contract; and
draft building management statement.
3. Clarity for options to purchase land
Although there are no new disclosure requirements for contracts arising from an Option to purchase land (an agreement in place where the vendor agrees to sell the property if requested by the purchaser (a call option) and the purchaser agrees to buy the property if requested by the vendor (a put option). However, the 2022 Regulation aims to clarify certain obligations under option agreements and enable an easier understanding by all parties. New provisions have been implemented to simplify issues in relation to prescribed documents, prescribed warranties, and implied terms.
A notable change is the inclusion of reg 17(3)which exempts contracts arising from a put option from the cooling off provisions under s 66S of the Conveyancing Act 1919 (NSW). The regulation states:
“The Act, section 66S does not apply to a contract made in consequence of the exercise of an option to compel the purchase of land”.
Regulation 17(3) references s 66S of the Conveyancing Act 1919, which permits cooling off rights for contracts for the sale of residential property unless an exemption under that Act applies. The change provides confirmation that a cooling off period does not apply to contracts arising from put options, just as it does not apply to contracts arising from call options.
The 2022 Regulation has brought the legislation in line with the NSW Supreme Court decision BP7 Pty Ltd v Gavancorp Pty Ltd [2017] NSWSC 265, which narrowed the kinds of sale contracts which are exempt from cooling off provisions. The case can be read via the following link.
4. Purchaser’s remedies
A new section of the 2022 Regulation, ‘Part 5 - Purchaser’s remedies’, provides guidance for a purchaser wanting to exercise their right to rescind, including the method to do so. The 2022 Regulation accounts for circumstances in which a purchaser may rescind a contract for the sale and purchase of land or where there is an Option to purchase residential property. The instances that will enable the purchaser to use its right to remedy include disclosure obligations not being met in both a standard conveyance or “off the plan” purchase, and when a breach of warranty takes place. Overall, the 2022 Regulation offers much needed reform and clarification for the interests of vendors and purchasers of property within NSW.
If you have any questions regarding the above changes or require assistance in relation to a property transaction, please contact our office as we would be more than happy to help.
This article is not legal advice, and the views and comments are of a general nature only. This article is not to be relied upon in substitution for detailed legal advice.
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