Legislation has been introduced to the Western Australian Parliament to amend the Sale of Land Act 1970.
The principal amendments are to Part III of the Act which is headed “Restrictions on sale of subdivisional land”.
Section 13 of the Act currently provides that a person shall not sell five or more lots in a subdivision or two or more lots in a strata subdivision unless that person is the registered proprietor thereof or is presently entitled to become the proprietor. The Section says a person is not entitled to become the proprietor of a lot unless he is entitled to be registered as proprietor under one or more registrable instruments or applications lodged at Landgate.
There is a view that the current Section has produced some unintended and unfair outcomes.
The Bill contains a new definition of “future lot contract” to mean an executory contract for the sale and purchase of one or more lots to be created by subdivision where the vendor is a person:
- who is not the proprietor of the lot or lots to which the contract relates; but
- who will become, or will be entitled to become, the proprietor of that lot or those lots.
Section 13 will now be amended to prohibit the sale of one or more lots in a subdivision, or strata subdivision unless the person is the registered proprietor or is presently entitled to be proprietor.
An exclusion to Section 13 is contained within new Sections 13A to 13D. The exclusion allows a person to sell a lot under a future lot contract if certain requirements are met. The future lot contract must now contain a condition (“vendor’s condition”) that before the end of the specified period, the vendor will become, or will be entitled to become, the registered proprietor of the lot or lots to which the contract relates.
The specified period is six months from the date of the contract or any other period which is specified in the contract.
A future lot contract must contain a warning that includes a statement to the effect that the vendor is not the proprietor of the lot or lots to which the contract relates. Without such a warning a future lot contract is illegal and void.
All deposits paid under a future lot contract must be paid to an approved deposit holder within two working days. Lawyers, real estate agents and settlement agents are approved deposit holders. A future lot contract which does not contain this provision is illegal and void.
Section 13G will include a requirement that the vendor must make all reasonable endeavours before the expiration of the period to obtain the necessary regulatory approvals for the subdivision and create and lodge the necessary plans for subdivision.
Section 13H will provide that when the vendor’s condition has been satisfied the vendor must give the purchaser notice in writing. The notice must be given within ten working days after the date on which the condition is satisfied. If the vendor fails to give the notice then the condition is deemed not to have been satisfied and the purchaser will be entitled to terminate the contract.
The amendments will only apply to future lot contracts that are entered into after the commencement date of the amendment.
In addition to these changes all of the penalties specified in the Act have been increased to $100,000.
For more information on this paper please contact David Miller on (08) 9321 3755.
The information published in this paper is of a general nature and should not be construed as legal advice. Whilst we aim to provide timely, relevant and accurate information, the law may change and circumstances may differ. You should not therefore act in reliance on it without first obtaining specific legal advice.