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.
