Property Law Reform: Wiping away the Tangled Web

Report
Nigel Hales
24 July 2014
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The Current Situation
Property Agents and Motor Dealers Act
 9 licence types
 4 types of registered employees
 Warning statements and strict requirements about form
 Strict protocol about presentation or proposed contracts
 Uncertainty about application of act in some
circumstances
 Contracts can be terminated if you get it wrong.
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Property Occupations Act 2014
– not yet commenced
 3 licence types
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- auctioneer
- real estate agent
- residential letting agent
1 registered employee type
- real estate salesperson
Property developers no longer require a licence
No longer necessary for a director of a licensed corporation to
have qualifications. Under new act, the person in charge of
the corporation’s business must hold the equivalent licence.
Principal licensee or person in charge must take reasonable
steps to ensure each real estate salesperson is
supervised and complies with act.
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Commission and Payments
 No longer any cap on commissions
 Commission only on actual amounts
 Can only recover payments if licensed and
properly appointed
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Appointment
 Must contain a warning to seek independent
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legal advice
Must contain details of services, fees, expenses
etc.
For a sale or exclusive agency, cannot be for
more than 90 days
Open listing may be revoked at any time
Other listings may be revoked on 30 days notice
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Disclosure of Beneficial Interests
 An agent must not acquire a beneficial interest
in an option to purchase the property
 An agent can acquire a beneficial interest in a
property (eg. Purchase the property) if:
o The agent acts fairly and honestly
o The client acknowledges that the agent is interested in
obtaining a beneficial interest and consents to that
o The client is in substantially as good a position as if the
property were sold at fair market value.
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Disclosure of Referral Relationships
 On the sale of residential property, an agent
must disclose to the buyer:
o
o
o
any relationship the agent has with any person to
whom the agent refers the buyer for professional
services
Benefits from any referral
Any benefit in connection with the sale, other than
commission from the seller.
 Property developers must also make the same
disclosure regarding referrals and
benefits.
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Residential Property Sales
 Residential Property
o
Residential property is real property that is used, or is
intended to be used, for residential purposes but does not
include real property that is used primarily for the purposes of
industry, commerce or primary production.
 Does not apply to:
o
o
o
o
o
Contracts formed at auction
A sale to a registered bidder before 5pm two business days
after the property has been passed in at auction
A contract formed by exercise of an option, between the
same parties
Sales to a publicly listed company, a subsidiary, the state or
statutory body
A sale of three or more lots to a buyer at
the same time.
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Property Developers
A property developer is a person who completes
more than 6 residential sales in a year and has more
than a 15% interest in the properties.
Deposit or part payment must be held in trust by:
o
Public trustee;
o
Law practice; or
o
A property agent.
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Replacement for
Statement
 Statement must be inserted immediately above
buyer’s signature
o
“The contract may be subject to a 5 business day
statutory cooking-off period. A termination penalty of
0.25% of the purchase price applies if the buyer
terminates the contract during the cooling-off period.
It is recommended that buyer obtain an independent
property valuation and independent legal advice
about the contract and his or her cooling-off rights,
before signing.”
 Failure to do so is an offence, but
does not allow termination of the
contract.
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Cooling Off Period
 5 business days from when buyer receives
signed contract.
 Can be waived by notice to seller (no need for
a lawyer’s certificate).
 Termination by notice, seller may deduct
termination penalty.
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Marketeers
 Broad definition of marketeer:
o
A person directly or indirectly involved in the sale or
promotion of the sale, or provision of service in
connection with the sale of residential property.
 Includes:
o
A person who provides advisory, management, legal,
accounting, administrative or other services.
 Offence for marketeer to:
o
o
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Engage in unconscionable conduct (s.208)
Make false or misleading representations (s.209)
Unduly harass another person (s.211)
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Other Property Law Reform
Land Sales Act – amendments introduced, not yet passed
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Developers will be able to sell off the plan, before getting approvals
Developments of 5 allotments or less exempt
No longer a maximum 10% deposit on proposed allotment sales
Contract can provide for settlements of community title lots up to 5 ½ years after contract
date
Increase installment contract deposit threshold to 20% for proposed lots
Better identification of proposed community title lots – disclosure plan, by a surveyor
Buyer will have 21 days to terminate for changes to plans if materially prejudiced
Property Law Act – still in review
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Change to what constitutes an installment contract – 20% deposit on proposed lots
Making obligations in easement documents binding on subsequent owners.
Body Corporate and Community
Management Act
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Discussion paper released – possibly lot entitlements will change again
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