Victorian Bills Explanatory Memoranda Victorian Bills Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
Sale of Land Amendment Bill 2014
Introduction Print
EXPLANATORY MEMORANDUM
Clause Notes
PART 1--PRELIMINARY
Clause 1 provides that the purposes of the Bill are to amend the Sale of
Land Act 1962 to re-enact, reform and modernise the provisions
relating to statements made under section 32 of that Act and to
make related and consequential amendments to the Owners
Corporations Act 2006 and to consequentially amend other
Acts.
Clause 2 provides for the commencement of the Bill.
Part 1 of the Bill (purposes and commencement provisions) will
come into operation on the day after the day on which the Bill
receives the Royal Assent. Amendments to regulation-making
powers under the Owners Corporations Act 2006 made by
clause 8 of Part 3 of the Bill will also come into operation on that
day.
In accordance with clause 2(2), the remaining provisions of the
Bill (i.e. Part 2, clause 7 in Part 3, Part 4 and Part 5) will come
into operation on a day or days to be proclaimed. Deferring the
commencement of Part 2 recognises that the legal profession and
conveyancing industry require time to adapt to the changes to the
Sale of Land Act 1962 contained in that Part.
As Part 4 of the Bill consequentially amends various Acts in line
with the changes made by Part 2, it will come into operation on
the same day as that Part.
571357 1 BILL LA INTRODUCTION 4/2/2014
Amendments to the Owners Corporations Act 2006 in clause 7
of Part 3 of the Bill are also deferred. These amendments will
commence following a review of fees for the provision of owners
corporation certificates.
Finally, the automatic repeal provision in Part 5 of the Bill will
also come into operation on proclamation.
Should any of the provisions outlined above not come into
operation before 1 July 2015, clause 2(3) provides for them to
come into operation on that day.
PART 2--AMENDMENT OF SALE OF LAND ACT 1962
Clause 3 amends section 30 of the Sale of Land Act 1962. Section 30
defines a number of terms for the purposes of Part II of that Act.
Clause 3(1) inserts a new definition of section 32 statement in
section 30(1) of the Sale of Land Act 1962. This term is defined
to mean a statement required to be given by a vendor under
section 32 in accordance with Division 2 of Part II of the Sale of
Land Act 1962.
Clause 3(2) repeals existing definitions of metropolitan area and
planning instrument in section 30(1) of the Sale of Land Act
1962. As a result of this Bill, there will no longer be a
requirement, as there is currently under section 32, for a vendor
to disclose that a planning instrument prohibits construction of a
dwelling house on land located outside the "metropolitan area".
Accordingly, this term is not required to be defined in section 30,
as it has no application to any other provision of Part II of the
Sale of Land Act 1962.
The definition of planning instrument is repealed as a
consequence of amendments to clarify the disclosure of planning
information set out in new section 32C(d) in clause 4 of the Bill.
Clause 3(3) repeals section 30(3), (4) and (5) of the Sale of Land
Act 1962. Section 30(3), (4) and (5) of the Sale of Land Act
1962 relates to Orders made by the Governor in Council in
relation to the definition of metropolitan area which is being
repealed by clause 3(1) of this Bill. As such, these subsections
are consequentially repealed.
2
Clause 4 substitutes Division 2 of Part II of the Sale of Land Act 1962
with a new Division 2 of Part II.
Division 2 of Part II currently comprises only one section:
section 32, which sets out the disclosure requirements vendors
must meet when selling land in Victoria.
New Division 2 of Part II comprises new sections 32 to 32P, each
of which re-enacts (either with or without amendment) particular
aspects of the existing section 32.
New section 32 re-enacts the current requirement for a vendor
under a contract for the sale of land to give a purchaser a signed
statement disclosing certain information about, and attaching
certain documents in relation to, the land before the purchaser
signs a contract for the sale of the land. The current obligation to
include the statement in any (subsequent) contract for the sale of
the land (existing section 32(1)(b) of the Sale of Land Act 1962)
has not been re-enacted. This will ease the regulatory burden of
section 32 of the Sale of Land Act 1962 and re-affirm that the
focus of this Division is on ensuring that certain information is
disclosed to a purchaser prior to the purchaser signing a contract
for the sale of land.
New section 32A sets out the financial matters in respect of land
that vendors are required to disclose in section 32 statements.
Current disclosure requirements in relation to undischarged
mortgages and charges over the land, as well as in relation to
terms contracts, are re-enacted without amendment. The current
requirement to disclose information about rates, taxes, charges
and similar outgoings affecting the land is also re-enacted.
New section 32B re-enacts certain obligations on vendors to
disclose insurance details. As is the case currently, new
section 32B provides that, where a contract for the sale of land
does not provide for the land to remain at the vendor's risk until
the purchaser is entitled to possession (or rents and profits), a
vendor is required to disclose particulars of any insurance policy
maintained by the vendor in respect of any damage to, or
destruction of, the land. A vendor of land will also continue to be
required to disclose particulars of any required insurance under
the Building Act 1993 that applies to a residence (constructed
within the preceding 6 years) on the land to which section 137B
of the Building Act 1993 applies.
3
New section 32C details matters relating to land use that vendors
are required to disclose to purchasers in section 32 statements.
Current requirements in relation to the disclosure of easements,
covenants and other similar restrictions affecting the land, and
that there is no access to the property by road, are re-enacted.
The requirement to state (where relevant) that land is in a
bushfire prone area within the meaning of regulations made
under the Building Act 1993 is also re-enacted, with an
amendment to clarify that the requirement applies in respect of
designated bushfire prone areas. Finally, in relation to land to
which a planning scheme applies, new section 32C(d) requires
vendors to disclose: the name of the planning scheme; the name
of the responsible authority (i.e. relevant municipal council); the
zoning of the land; and the name of any planning overlay
affecting the land. New section 32C(d) updates and modernises
existing requirements in relation to the disclosure of planning
information.
New section 32D sets out notices made in respect of land that
vendors are required to disclose in section 32 statements.
New section 32D(a) requires vendors to disclose particulars of
notices, orders, declarations, reports or recommendations, or
approved proposals directly and currently affecting the land of
which the vendor might reasonably be expected to have
knowledge. This new paragraph substantially re-enacts an
existing obligation under section 32, with amendments to limit a
vendor's obligation to the disclosure of documents that directly
and currently affect the land. Under new section 32D(a) vendors
are not obliged to disclose the existence of historical documents
where those documents do not have a continuing application to
the land.
New section 32D(b) specifies disclosure obligations in relation to
land contaminated by agricultural chemicals or affected by
livestock disease by requiring vendors to disclose whether there
are any notices, property management plans, reports or orders in
respect of the land issued by a government department or public
authority in relation to livestock disease or contamination by
agricultural chemicals affecting the ongoing use of the land for
agricultural purposes. A vendor's disclosure requirements under
new section 32D(b) supplement the broader disclosure
obligations in new section 32D(a).
4
An existing obligation on vendors to disclose particulars of any
notice of intention to acquire served under section 6 of the
Land Acquisition and Compensation Act 1986 is re-enacted
(without amendment) in paragraph (c) of new section 32D.
New section 32E re-enacts an existing obligation on vendors of
land on which there is a residence to disclose particulars of
building permits issued under the Building Act 1993 in the
preceding 7 years, in relation to a building on the land.
New section 32F details information relating to owners
corporations required to be disclosed in section 32 statements.
Currently, a vendor of land affected by an owners corporation
(for example, an apartment, unit or townhouse) is required to
obtain a current owners corporation certificate from the relevant
owners corporation and attach a copy of that certificate to their
statement under section 32 of the Sale of Land Act 1962, along
with a copy of certain documents required to accompany an
owners corporation certificate under the Owners Corporations
Act 2006. New 32F(1)(a) enables vendors to fulfil their
obligations to disclose information relating to an owners
corporation affecting the land by (unless the owners corporation
is inactive as defined by new section 32F(2)) either--
· specifying the information prescribed for the purposes
of section 151(4)(a) of the Owners Corporations Act
2006 themselves in their section 32 statement; or
· attaching a copy of the current owners corporation
certificate issued in respect of the land to their
section 32 statement.
In either case, vendors will also be required to supply copies of
the documents required to accompany an owners corporation
certificate under the Owners Corporations Act 2006 (new
section 32F(1)(a)(ii)).
Enabling vendors to disclose information they may hold
themselves, as an alternative to obtaining a certificate disclosing
the same information, is consistent with other disclosures
currently required under section 32 of the Sale of Land Act
1962, which can be effected either by a statement made by the
vendor or through provision of a certificate. It also provides
greater flexibility to vendors in complying with the requirement
to disclose information about their owners corporation.
5
New section 32F also addresses circumstances in which an
owners corporation is inactive (new section 32F(1)(b) and (2)).
An inactive owners corporation is defined to include an owners
corporation that has not in the previous 15 months had an annual
general meeting and has not fixed any fees and has not held any
insurance. This definition is inclusive to give vendors the
flexibility to make the case that their owners corporation is
inactive in circumstances other than those specifically set out in
the definition.
Because it is expected that a vendor in a lot affected by an
inactive owners corporation will be unable to either personally
provide required particulars about the owners corporation in their
section 32 statement, or obtain an owners corporation certificate
from their owners corporation, new section 32F(1)(b) enables
vendors of lots in inactive owners corporations to specify that
the owners corporation is inactive in their section 32 statement.
This ensures that a vendor is able to provide purchasers with
accurate information about the status of the owners corporation
affecting the lot for sale.
New section 32G re-enacts existing requirements on vendors to
disclose certain information concerning land that is affected by a
work-in-kind agreement (within the meaning of Part 9B of the
Planning and Environment Act 1987), as well as requirements
to provide certain certificates or notices in the case of land in
respect of which there is a growth areas infrastructure
contribution recording (also within the meaning of Part 9B of the
Planning and Environment Act 1987).
New section 32H requires vendors of land to specify in their
section 32 statements if certain essential services (namely,
electricity, gas and water supply, sewerage and telephone
services) are not connected to the land. Vendors will not be
required, as is the case currently, to provide information about
connected essential services.
New section 32I substantially re-enacts existing requirements on
vendors to attach to their section 32 statements evidence of their
title to the land, with amendments to bring the requirements into
line with contemporary conveyancing practice.
6
Currently, vendors of land under the Transfer of Land Act 1958
are required to supply copies of their Certificate of Title to the
land in their statements under section 32 of the Sale of Land Act
1962. New section 32I(a) replaces this obligation with a
requirement to provide a copy of the Register Search Statement
for the land. Vendors will also be required to supply a diagram
of the location of the land as specified in the Register Search
Statement.
Existing requirements on vendors of general law land to provide
evidence of their title to the land have been re-enacted in new
section 32I(b).
New section 32I(c) re-enacts a requirement on a vendor who is
not the registered proprietor of the land or the owner of the estate
in fee simple in the land to provide evidence of his or her right or
power to sell the land.
New section 32I(d), (e) and (f) re-enact requirements to disclose
information about subdivisions. New section 32I(d) requires a
vendor to disclose subdivision plans that are yet to be registered,
while new section 32I(e) re-enacts existing disclosure
requirements for staged subdivisions. New section 32I(f)
provides for disclosure requirements where there are plans
(within the meaning of the Subdivision Act 1988) to amend or
re-develop subdivided land, including consolidations.
New section 32J(1) provides that, if any information required in a
section 32 statement is specified in a certificate, notice or other
document issued by a relevant authority, a vendor may attach that
certificate, notice or document to the section 32 statement for the
purposes of complying with new Division 2 of Part II as
substituted by clause 4. This new section re-enacts an existing
provision in section 32, with adjustments to enable vendors to use
certificates (or other documents) issued by relevant authorities to
demonstrate compliance with any or all of the requirements of
new Division 2 of Part II.
New section 32J(2) introduces a new capacity for a vendor, who
is required by new section 32B to disclose insurance details in
their section 32 statement, to attach a copy or extract of a policy
of insurance that contains the relevant information to their
section 32 statement, for the purposes of complying with new
section 32B.
7
New section 32K provides a purchaser under a contract for the
sale of land with rescission rights in certain circumstances.
New section 32K(1) sets out the circumstances in which the
rescission rights in section 32K(2) and (3) will apply, namely
where a vendor--
· supplies false information to a purchaser in a section 32
statement, or any certificates, notices, policies or other
documents required by Division 2 of Part II to be
attached to a section 32 statement; or
· fails to supply all the information required to be
supplied to a purchaser either in a section 32 statement
or attached to the section 32 statement, as required by
Division 2 of Part II; or
· fails to give a purchaser a section 32 statement signed
by the vendor before the purchaser signs the contract for
the sale of land.
New section 32K(2) substantially re-enacts existing section 32(5)
of the Sale of Land Act 1962 enabling a purchaser to rescind any
contract for the sale of land which has been entered into on the
basis of information contained in the section 32 statement or
attached to the section 32 statement at any time before the
purchaser accepts title and becomes entitled to possession or to
the receipt of rents and profits.
New section 32K(3) provides for a new right of rescission where
a vendor fails to give the purchaser a section 32 statement before
the purchaser signs the contract.
New section 32K(4) re-enacts existing limitations on a
purchaser's rescission rights under section new 32K(2) and also
applies those limitations to the new right to rescind under new
section 32K(3). New section 32K(4) provides that a purchaser
may not rescind a contract for the sale of land where the court is
satisfied--
· that the vendor has acted honestly and reasonably, and
ought fairly to be excused for the contravention; and
· the purchaser is substantially in as good a position as if
all the relevant provisions of new Division 2 of Part II
had been complied with.
8
New section 32L substantially re-enacts an existing offence
provision (existing section 32(6) of the Sale of Land Act 1962)
relating to the provision of false information, or failure to provide
complete information, in a section 32 statement, with
amendments to extend the provision to circumstances in which a
vendor has failed to give a purchaser a section 32 statement
before the purchaser has signed the relevant contract for the sale
of land. The offence attracts a maximum penalty of 300 penalty
units, in the case of a body corporate, and 60 penalty units in any
other case. The penalty for an offence against new section 32L is
greater than that for an offence against existing section 32(6) of
the Sale of Land Act 1962 which is 50 penalty units. The new
penalties are consistent with other penalties in the Sale of Land
Act 1962.
New section 32M re-enacts an existing right available to a
purchaser to rescind a contract for the sale of land, if, before the
purchaser accepts title and becomes entitled to possession or to
the receipt of rents and profits, a notice of intention to acquire
land has been served under section 6 of the Land Acquisition
and Compensation Act 1986 in respect of the land subject to the
contract of sale.
New section 32N re-enacts, an existing provision confirming that
a provision in a contract for the sale of land that excludes,
modifies or restricts any provision of Division 2 of Part II of the
Sale of Land Act 1962 is void and of no effect.
New section 32O re-enacts an existing provision which states that
if a vendor and a purchaser have entered into a contract in respect
of which a section 32 statement has been given, and the vendor
and purchaser enter into a subsequent contract in substantially the
same terms as the original contract, the vendor will not be
required, in respect of the subsequent contract, to give the
purchaser another section 32 statement.
New section 32P re-enacts an existing provision (section 32(11)
of the Sale of Land Act 1962) that confirms that an agreement to
transfer a forest carbon right within the meaning of the Climate
Change Act 2010 is not a contract for the sale of land for the
purposes of new Division 2 of Part II.
9
Clause 5 inserts new Division 2A into Part II after Division 2 of Part II of
the Sale of Land Act 1962. New Division 2A sets out new
requirements relating to due diligence checklists.
New section 33 defines certain terms for the purposes of new
Division 2A of Part II. The term licensed estate agent is defined
to have the same meaning as in the Estate Agents Act 1980.
The Estate Agents Act 1980 defines licensed estate agent to
mean the holder of an estate agents licence. The term vacant
residential land is defined to mean any vacant land on which the
building of a residence is permitted. This is designed to ensure
that vacant land (including land in agricultural or rural areas) is
captured by the requirement to provide a due diligence checklist
if the relevant planning scheme would enable a residence to be
built on that land.
New section 33A explains the concept of a "due diligence
checklist". A due diligence checklist is a checklist prepared for
prospective purchasers of vacant residential land (as defined in
new section 33) or land on which there is a residence to assist
purchasers to identify any information (additional to the
information supplied in the section 32 statement for the land) that
the purchaser might wish to obtain in respect of the land for sale.
New section 33B requires a due diligence checklist to be made
available to prospective purchasers from the time the land is
offered for sale.
New section 33B(1) requires a vendor offering land for sale that
is either vacant residential land or land on which there is a
residence to ensure that a due diligence checklist is made
available to any prospective purchaser from the time the land is
offered for sale. Failure to meet the requirement of subsection
(1) is an offence which attracts a maximum penalty of 60 penalty
units.
New section 33B(2) provides that a vendor must ensure that the
due diligence checklist is in the form approved by the Director of
Consumer Affairs Victoria. Failure to meet this requirement is
an offence which attracts a maximum penalty of 60 penalty units.
New section 33B(3) provides that subsections (1) and (2) do not
apply to a vendor if the vendor has engaged a licensed estate
agent to act on their behalf.
10
New section 33B(4) provides that a person who is a licensed
estate agent and acting for a vendor, offering land for sale that is
vacant residential land or land on which there is a residence, must
ensure that a due diligence checklist is made available to any
prospective purchaser from the time the land is offered for sale.
Failure to comply with subsection (4) is an offence attracting a
maximum penalty of 60 penalty units.
New section 33B(5) establishes that a person who is a licensed
estate agent and acting for a vendor, must ensure that the due
diligence checklist is in the form approved by the Director of
Consumer Affairs Victoria. It is an offence to fail to comply with
this subsection, attracting a maximum penalty of 60 penalty units.
New section 33B(6) provides that, for the purposes of new
section 33B a due diligence checklist is made available if--
· copies of the due diligence checklist are on display or
offered to prospective purchasers at any inspection held
of the land; and
· any Internet site maintained by the vendor and any
person acting as the licensed estate agent of the vendor
where the land is offered for sale allows access to a
copy of the due diligence checklist either directly or by
linking to another Internet site where a copy may be
obtained.
New section 33C requires the Director of Consumer Affairs
Victoria to publish a copy of the due diligence checklist
(approved by the Director under new section 33B) on the internet
site for Consumer Affairs Victoria.
Clause 6 inserts new section 52 into the Sale of Land Act 1962. New
section 52 sets out transitional arrangements relating to the
substitution of Division 2 of Part II of the Sale of Land Act 1962
by clause 4.
New section 52(1) defines various terms for the purposes of new
section 52. The term Amending Act is defined to mean the Sale
of Land Amendment Act 2014, while the term commencement
day is defined to mean the day on which section 4 of the
Amending Act comes into operation. The term old section 32 is
defined to mean section 32 (of the Sale of Land Act 1962) as in
force immediately before the commencement day.
11
New section 52(2) provides that, subject to new section 52(4),
old section 32 (other than subsection (1)(b) of that section, which
requires a section 32 statement to be attached to a contract of
sale) continues to apply to a vendor in respect of the sale of land
on and after the commencement day if the following criteria are
met--
· before the commencement day, a statement or
statements under old section 32 has been prepared and
the vendor has that statement or statements; and
· on and after the commencement day that land remains
for sale.
New section 52(3) provides that, if new section 52(2) applies to a
vendor and the vendor, on or after the commencement day, is
required to amend or update the statement or statements prepared
under old section 32, the vendor may amend or update the
statement or statements in accordance with old section 32.
New section 52(4) provides that if land offered for sale before the
commencement day is withdrawn from sale and the vendor again
offers the same land for sale on or after the commencement day,
the vendor must comply with Divisions 2 and 2A of Part II of
(as substituted and inserted, respectively, by this Bill).
New section 52(5) provides that, if new section 52(2) applies to a
vendor, on and after the commencement day, the vendor is not
required to comply with Division 2A of Part II, as introduced by
this Bill.
PART 3--AMENDMENT OF OWNERS CORPORATIONS
ACT 2006
Clause 7 amends section 151(2) of the Owners Corporations Act 2006.
Section 151(2) of the Owners Corporations Act 2006 provides
that a fee charged by an owners corporation for an owners
corporation certificate must not exceed the prescribed fee.
Amendments to this section are made to insert the word
"relevant" after the words "must not exceed the", in recognition
that regulation-making powers in section 204 of the Owners
Corporations Act 2006 are being amended by clause 8 of the
Bill to enable differential fees to be set for the provision of an
owners corporation certificate. These fees may vary according
to, for example, value, time, complexity or urgency.
12
Clause 8 amends the regulation-making powers in section 204 of the
Owners Corporations Act 2006.
Clause 8(1) inserts new subsections (da) and (db) after section
204(1)(d) of the Owners Corporations Act 2006. The new
subsections respectively provide that the Governor in Council has
the power to prescribe fees generally under the Owners
Corporations Act 2006, and to prescribe fees that may be
imposed for the provision of an owners corporation certificate
under that Act.
Clause 8(2) inserts new section 204(4) after section 204(3) of the
Owners Corporations Act 2006. New section 204(4) provides
that the Governor in Council's power to make regulations
providing for the imposition of fees for the provision of an
owners corporation certificate may be exercised by providing
for--
· specific fees;
· maximum fees;
· minimum fees;
· fees that vary according to value, time, complexity or
urgency;
· fees that vary based on the number and regularity of
requests made by a person;
· differential fees for different classes of request or based
on the number of lots in a property.
PART 4--AMENDMENT OF OTHER ACTS
Clause 9 amends section 41(1)(b) of the Catchment and Land Protection
Act 1994 to substitute the words "in a section 32 statement
prepared in accordance with Division 2 of Part II" for the current
words "in a statement under section 32". This amendment is
consequential on the amendments in Part 2 of the Bill.
Clause 10 repeals section 84AB of the Electricity Industry (Residual
Provisions) Act 1993 which enables the Governor in Council to
declare, by Order, that certain electricity industry companies are
not required, in respect of a particular sale or class of sales, to
include certain particulars referred to in current section 32(2)(e)
of the Sale of Land Act 1962 in a statement under that section.
13
This section is being repealed as it is a spent provision and is no
longer required.
Clause 11 amends the note at the foot of section 32(2) of the Fire Services
Property Levy Act 2012 to substitute "section 32 statement
prepared in accordance with Division 2 of Part II" for the current
words "statement under section 32". This amendment is
consequential on the amendments in Part 2 of the Bill.
Clause 12 repeals item 24 of Schedule 1 to the Mineral Resources
(Sustainable Development) Act 1990. Item 24 of Schedule 1 is
a longstanding unproclaimed provision to amend section 32 of
Sale of Land Act 1962, and would be no longer workable in its
current form as a result of the amendments introduced by this
Bill.
PART 5--REPEAL OF AMENDING ACT
Clause 13 provides for the repeal of the Bill on 1 July 2016, one year after
the day on which the last of any unproclaimed provisions will
come into operation by default. Section 15(1) of the
Interpretation of Legislation Act 1984 provides that the repeal
of the Bill does not affect the continuing operation of its
amendments.
14