Recent Changes to Real Property Contracts

Various changes to the legislative framework surrounding real property sales have resulted in a raft of new obligations on Vendors and Purchasers in recent months.

For all Contracts which exchange from 1 September 2017, Vendors will need to:

  • Include the prescribed warning about asbestos;
  • Provide both a sewer lines location diagram and a diagram showing the sewer infrastructure at the property, if these diagrams are available, whereas previously the Vendor only needed to provide either of these diagrams; and
  • Provide a full copy of any relevant strata by-laws, even if they are the model by-laws as contained in the Strata Schemes legislation.

If any of these obligations are not complied with, then the Purchaser will be able to rescind the Contract (exit the Contract without any financial penalty) at any time within 14 days after Contracts have been exchanged.

Vendors will also need to warrant that the property is not affected by a strata renewal proposal, any orders under section 121B of the Environmental Planning and Assessment Act 1979 (NSW) or any rights of way under section 235C of the Mining Act 1992 (NSW). If the property is affected by any of these, then it is important for disclosure to be provided of this in the Contract. If disclosure is not made and a Vendor warranty is breached, the Purchaser will be able to rescind the Contract.

It is therefore very important to ensure that any existing Contracts are reviewed to make sure that they comply with the legislation and that any future Contracts are drafted correctly.

Additionally, the foreign resident capital gains withholding amount has changed. For property sales of over $750,000 where Contracts have been exchanged from 1 July 2017, Purchasers must withhold 12.5% of the purchase price and pay that amount to the Australian Taxation Office, unless the Vendor produces a clearance certificate on or before settlement. Even if a Vendor can prove they are an Australian citizen or resident, a clearance certificate is still required.

If you would like assistance with selling or purchasing a property, please feel free to contact us.

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Authored by

Raea Khan

Director Lawyer

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Raea Khan Circle
Director Lawyer
Raea Khan

Raea is Managing Director and Principal Lawyer for PBl Law Group. Raea assists clients with major projects, property developments, construction and strata law.

He has worked in Western Australia and Queensland assisting with expansion projects in the energy and resource sector and now predominately advises clients in Strata and Community Association matters.

He is a member of the Australian College of Strata Lawyers where majority of his work is advising developers and owners corporations with dispute related minor and major defects, strata governance and common property litigation. He is proficient at leading negotiations and meetings.

Raea has a particular interest in the commercial aspect of any dispute and always tries to weigh up the risk, reward and benefit of legal proceedings at each different stage.

Raea enjoys all forms of competitive sport, including Crossfit and actively participates in Triathlons, representing Australia as an age group athlete. He was a member of Red Head Surf Lifesaving club.

  • Strata Law
  • Construction & Major Projects
  • Commercial and Business Law
  • Planning & Environment Law