The issue

On 1 October 2014 new requirements were imposed on vendors of real estate in regard to the provision of information to potential purchasers. New trips and traps can leave an unwary vendor or agent facing a fine or failing to have a binding Contract.

The new requirements most likely to cause concern are:

1. Due Diligence Checklist When selling a residential property or vacant residential land, it is now necessary that this checklist be made available to any prospective purchasers from the time the property or land is offered for sale. This obligation falls directly on the estate agent and they must make the checklist available at inspections and linked from their website. Having the vendor's solicitor or conveyancer attach this checklist to the Vendor's Statement will not be sufficient. In circumstances where there is no selling agent, then the obligation to provide the checklist falls on the vendor personally.
2. Owners Corporation information may be provided by vendor or may be declared 'inactive' The information required to be disclosed regarding an Owners Corporation may now be provided directly by the vendor, rather than requiring a formal certificate executed by the Owners Corporation. Further, if an Owners Corporation has not held any insurance or charged fees or had an AGM for the past 15 months, then the vendor may state that the Owners Corporation is inactive and not provide further information. Extreme caution should be used when declaring an inactive Owners Corporation for any property other than a two lot subdivision, as this would then be disclosing a breach of the Owners Corporation Act 2006 with respect to insurance (which would in itself provide the purchaser with the ability to avoid the Contract).
3. Copy Certificate of Title is no longer sufficient proof of title. It is now a specific requirement that a 'Register Search Statement' (i.e. Title Search) be attached to the Vendor's Statement. While conducting a Title Search has always been good practice, as registered interests such as Caveats could be missed if a copy Title were relied upon, a Title Search is now mandatory.
4. Updated General Conditions for Contract of Sale Amendments have been made to the General Conditions of the Contract of Sale and so caution should be exercised in using old forms. In particular, as the General Conditions include a vendor's warranty that they are identical to the current General Conditions set by the Estate Agents (Contract) Regulations 2008, vendors will have breached this warranty by using an outdated version. While the main amendments are those noted above, many other sections of the Vendor's Statement have also been adjusted to change the precise information that is required.

Failure to comply with the requirement to provide a Due Diligence Checklist can expose the vendor or agent to a fine of up to 60 penalty units (currently $8,856.60), while a breach of the other requirements may allow the purchaser to avoid the Contract.

Practical tip

To ensure that you avoid difficulty when looking to sell, it is crucial that a solicitor prepare your Contract and Vendor's Statement. They can ensure that you comply with your disclosure obligations and that any Contract entered into is valid and binding. Further, any documents prepared before the introduction of the new requirements should be recalled and amended as necessary to ensure compliance.

If you have any queries regarding a sale, please feel free to call Andre Ong on (03) 8561 3317.

The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.

Liability limited by a scheme approved under Professional Standards Legislation.