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Last Thursday REIWA held a member forum which revealed the changes to the 2018 version of the Joint Form of General Conditions.
To help assist you, we’ve put together a summary of all the changes.
|Clearance certificate||Withholding tax regime||3.7(a), 26.1|
|Commissioner||Withholding tax regime||3.7, 26.1|
|Future Lot||Changes to s13 of Sale of Land Act||1.4, 13.1, 13.9, 13.10|
|Tax Administration Act||Withholding tax regime||3.7, 26.1|
|Threshold amount||Withholding tax regime||3.7, 26.1|
|Variation notice||Withholding tax regime||3.7, 26.1|
|Withholding amount||Withholding tax regime||3.7, 26.1|
1.4 Deposit Future Lot
It states that when the sale relates to the sale of a Future Lot (as defined in the Sale of Land Act, but means selling land the seller does not own at the contract date) that the deposit must be paid to the deposit holder within two business days from receipt and held on trust for the person entitled to receive the deposit with either a legal practitioner, real estate agent, or a settlement agent.
1.9 Investment of Deposit
Clarifies that the deposit can be paid into an interest earning trust account, if required by law.
2.3 Rate Encumbrance- Unpaid Outgoing
Now provides for when a Rate Encumbrance is registered on the certificate of title then prior to settlement the Rate Encumbrance must be removed from the title at settlement.
2.8 Security Interest
The seller in Section 9.1(h) still represents that the seller has good title and is or will be the sole owner of the property chattels.
The new section 2.8 permits the buyer, after obtaining relevant information from the seller, to search the Personal Property Security Register to determine if there are security interests registered against the property chattels being sold with the property.
3.7 Foreign Resident Withholding
The General Conditions will now incorporate the provisions that were previously in REIWA annexure 190.
The provisions clarify that if the market value of the Property is the Threshold Amount (currently $750,000) or more and the seller does not provide a Clearance Certificate then the buyer must deduct the withholding amount (currently 12.5 per cent) and pay that amount to the ATO.
3.12 Electronic Conveyancing
The General Conditions will now incorporate the provisions that were previously in REIWA annexure 187.
The electronic conveyancing system, known as PEXA, for settlement will apply when it is a Landgate requirement, or if the contract specifies there will be, or the parties agree to an electronic settlement. The Landgate requirement is scheduled to take effect on 1 May 2018.
The provision sets out matters relating to setting up the workspace, electronic correspondence, withdrawal from electronic settlement, payment, tracing mistaken payments, delayed settlements.
The General Conditions still provide for the existing ‘manual’ settlements.
Section 5.1(a) now clarifies that the purpose of the inspection is to check that the seller has complied with the seller’s obligations under the Contract, and that access is granted for that purpose; and now provides that the buyer and seller should endeavour to agree to the timing of the initial inspection five business days before the settlement date.
Section 5.1(b) now provides for the buyer’s right to one further inspection prior to settlement or possession, if the buyer in the initial inspection, has identified items that require rectification by the Seller under the Contract. By way of example, if the swimming pool was in a pristine condition at the Contract date but at the inspection the pool water was green rather than clean, then the buyer would be entitled to a second inspection to confirm that the pool was in the condition as it was in at Contract date. This is not an opportunity to conduct another full inspection but rather to determine if the initial problem has been resolved.
9 Seller Representation & Warranty
9.3 is a new clause and has been added to address the scenario where after Contract Date but before settlement anything occurs or comes into existence with the result that a warranty or representation would be untrue as at settlement.
If this occurs, then unless the parties otherwise agree, the buyer will have no right to terminate the Contract or defer or delay settlement or withhold any part of the purchase price unless the event unreasonably affects the proposed use of the property by the buyer or materially affects the value of the property.
Although there could be a debate about what those things ultimately mean, it would really boil down to what a court would say is reasonable or material.
The new clause 9.3 should now provide direction to conveyancers in dealing with clients who, for instance, say that they will not settle unless this or that is fixed or done. The new clause probably reflects what the common law position is, but gives express written clarity.
Sub division- provides for the changes to section 13 of the Sale of Land Act where the seller of a sub-division of land or a strata lot is not the registered proprietor of the land when entering into the contract with the buyer. There are special provisions relating to a Warning Notice, the deposit, conditions on approval, lodging plans and giving information (clause 13.9)
Clause 21.4 has been amended to provide for the service of notices by email.
The notice is deemed to be served when it is sent unless a return email is received to the effect that the email was unsuccessful.
If the email is sent after 5pm or is sent on a day that is not a Business Day then it is deemed to have been served on the following Business Day.
With the new version of the Joint Form of General Conditions, the following forms have been updated to reflect the 2018 version:
The following forms have further changes (in addition to the above change), as listed below:
Option to Purchase Land (Form 116)
Seller’s Disclosure Statement (Form 322) and Seller’s Disclosure Statement Commercial Property (Form 404)
Auction Particulars and Conditions of Sale of Freehold property (Form 115)
Finally, we have removed Form 112 2009 Joint form of General Conditions.
For any forms that are not finalised or any templates you have created of the above forms, you will see an exclamation mark (!) icon next to the form name. This is the prompt to update the form based on the change.
Article and Information provided by REIWA.com.au