SALE OF LAND (RIGHTS AND DUTIES OF PARTIES) BILL 2009 Explanatory Statement

2009

LEGISLATIVE ASSEMBLY OF THE
NORTHERN TERRITORY

MINISTER FOR JUSTICE AND ATTORNEY-GENERAL

Sale of Land (RIGHTS AND DUTIES OF PARTIES) Bill 2009
(Serial No 82)

EXPLANATORY STATEMENT

GENERAL OUTLINE

· that a person selling land must make available for inspection by prospective buyers a draft contract of sale and, for the purposes of disclosure, make available other information and documents at the time when the land is offered for sale;
· that the obligations will apply in respect of the sale of most land in the Northern Territory;
· that a contract may be rescinded if the required disclosures are not made. It will also be an offence to fail to disclose;
· for a cooling off period of four days for sales of residential land (other than by auction);
· for the right to a cooling off period to be waived if a legal practitioner or conveyancing agent provides an appropriate certificate;
· for various offences if misleading information is provided by agents, sellers or experts;
· that the new arrangements do not apply to contracts entered into, or land listed for sale, prior to the commencement of the legislation.
NOTES ON CLAUSES

The Bill deals with the rights and responsibilities of persons selling and buying land, including:

· what documents must be made available for inspection when land is offered for sale;
· cooling-off periods for sales of residential land.
Part 1 - Introduction

Clause 1. Short title
This is a formal clause which provides for the citation of the Bill.

Clause 2. Commencement
The Act will commence on the day or days fixed by the Administrator by notice in the Northern Territory Government Gazette.

Clause 3. Definitions
Clause 3 provides the definitions necessary for the Act and the Regulations.

Clause 4. Disclosure documents
Clause 4 lists the documents required to be made available by the seller for the purpose of the Act.

Clause 5. When land is offered for sale
Clause 5 defines the point when a person is considered to have offered land for sale, and must therefore provide the disclosure documents.

The intent of the clause is to identify the point in time when the property is truly on the market.

The definition is not intended to apply to informal situations that might lead to a sale. For example, where a land owner shows a neighbour their home, engages in a discussion about possible sale and receives an offer.

Clause 6. Application of Criminal Code
Part IIAA of the Criminal Code (which states the general principles of criminal responsibility) applies to offences committed against the Act.

Clause 7. Act applies to all sales of land unless excluded by regulation
The Act applies to all sales of land in the

Northern Territory, subject to any exclusions set out in this clause or prescribed by regulation.

Clause 8. Contracts excluded from application of Act
The Act will not apply to a contract or proposed contract for the sale of land where the buyer is related to the seller; or where a contract arises from the exercise of an option to purchase the land and either the option was contained in a will or lease and/or the period for exercising the option is longer than 60 days or where the buyer makes an unsolicited offer to purchase.

Clause 9. Conditions of contract
A provision in a contract of sale for land that excludes or changes the operation of the Act has no effect. The Act does not prevent a contract for the sale of land containing conditions agreed by the seller and buyer after the seller offered the land for sale.

Clause 10. Act does not affect other rights and remedies
Preserves any existing right or remedy existing outside the Act.

Clause 11. Act binds Crown
The Crown is subject to the Act with the exception of the offences provisions of the Act.

Clause 12. Disclosure documents to be available for inspection
A person commits an offence if that person offers land for sale without making the disclosure documents available for inspection by the prospective buyer. The fault elements are intentionally offering the land for sale and recklessness as to whether they are available for inspection.

Clause 13. Right to rescind contract if disclosure documents not available
Where the seller has entered into a contract for the sale of land and fails to make the disclosure documents available for inspection by the buyer, a buyer has the right to rescind the contract.

On written notice, the seller must remedy the failure before the earlier of the following:

· within five working days after the notice is given; or
· on the day for completion of the contract.
If the failure is not remedied the buyer rescinds the contract by giving a rescission notice to the seller.

· the deposit must be paid back to the buyer;
· the buyer is not liable for damages, costs or expenses; and
· a real estate agent is not entitled to any commission or expenses from the seller in relation to the contract.
Clause 14. Certain conditions implied in contract
A contract for the sale of land subject to certain implied conditions, whether they are in the contract or not.

A breach of an implied condition of contract will provide the buyer a right to rescind the contract or complete the contract and claim damages.

Clause 15. Application of Part to housing schemes
If the CEO Housing owns a share of a property under a shared equity scheme, and the majority share owner wants to sell the property, then only the owner of the majority share has to comply with the disclosure requirements.

Part 3 – Cooling-off period for contracts for sale of residential property

Clause 16. Application of Part
Part 3 applies only to sales of residential property.

Clause 17. Cooling-off period
There is a cooling-off period for a contract for the sale of residential property unless the property is sold by tender or auction; or the contract is entered into within four working days of a proposed auction, or the property has been passed in at auction and a contract is made for the sale of the property within two working days to a buyer who bid at the auction, or under section 18 the buyer waives the cooling off period.

Sub-clause(3) sets out when the cooling-off period starts and ends. The period may be extended or shortened by a provision in the contract or by written agreement.

Before a provision or agreement to shorten a cooling-off period comes into effect, sub-clause (5) requires the buyer to receive conveyancing advice from a lawyer or a conveyancing agent and that the lawyer or conveyancing agent signs a certificate that complies with the Act, a copy of which the buyer must give to the seller.

Clause 18. Buyer may waive cooling-off period
The cooling-off period may be waived by the buyer if before signing the contract, the buyer receives conveyancing advice. The lawyer or conveyancer giving the advice must sign a complying certificate and provide a copy of the certificate to the seller.

Clause 19. Right to rescind during cooling-off period
The buyer has a right to rescind the contract for the sale of residential property by providing written notice during the cooling-off period.

Clause 20. Consequences of rescission
Establishes the effects of rescission.

Clause 21. Certificate of legal practitioner or conveyancing agent
Sets out what is required for a lawyer or conveyancer’s certificate on conveyancing advice to a buyer regarding the cooling-off period.

Clause 22. Making misleading statement
It is an offence to make a misleading statement in a required report or certificate, knowing that the statement is made in a required report or certificate and that the statement is misleading or reckless as to whether it is misleading.

Clause 23. Giving misleading document
It is an offence to knowingly or recklessly give a misleading document to someone.

It will not be an offence if the person giving the document draws the receiver’s attention to the misleading aspect of the document and to the extent that is reasonable gives the receiver the information necessary to remedy the misleading aspect.

Clause 24. Compensation for misleading document
A person who prepared a misleading document is liable to the buyer for any loss or expense suffered.

Clause 25. Time for starting prosecution
A prosecution for an offence against this Act may be started within two years after the alleged commission of the offence. This is longer than the six month period that would otherwise apply (see Justices Act, section 52).

· must be signed by the buyer or the buyer’s lawyer or conveyancing agent; and
· must be given to the seller or seller’s lawyer or conveyancing agent.
The burden of proving whether notice has been given is on the buyer.

Clause 27. Approved forms
The CEO of the Department of Justice may approve forms for use under this Act.

Part 5 – Transitional matters for Sale of Land (Rights and Duties of Parties) Act 2009

Clause 29. Definition
Inserts the definition of ‘commencement date’ for the purposes of Part 5.

Clause 30. Act does not apply to existing contract
Contracts for the sale of land which were made before the commencement date are not subject to the Act.

Clause 31. Application of Act to land listed or advertised before commencement
If the property was listed for sale with an agent, or advertised by the seller, within six months of the Act commencing, then the Act wont apply to the contract, unless:

– the property isn’t sold within six months of the Act commencing;
– the seller changes or appoints a new Real Estate Agent.

Northern Territory Explanatory Statements

SALE OF LAND (RIGHTS AND DUTIES OF PARTIES) BILL 2009