Property Alert – Recent amendments to conveyancing legislation (Conveyancing Act) in NSW

Property Alert – Recent amendments to conveyancing legislation (Conveyancing Act) in NSW

The Conveyancing Legislation Amendment Act 2018 (NSW), assented to on 22 November 2018, introduces a number of changes to the Conveyancing Act 1919 (NSW) (Conveyancing Act) and the Real Property Act 1900 (NSW) that will affect property transactions in NSW.

We summarise the main amendments below.

1. New provisions for electronic land transactions

In support of the industry’s transition to paperless conveyancing, NSW land transactions can now be conducted electronically.

New provisions in the Conveyancing Act make it clear that land transaction documents will be valid and enforceable when they are:

  • contained in an electronic data file form; and
  • electronically signed and witnessed.

These new provisions now apply to all contracts and deeds relating to land under the Real Property Act 1900 (NSW).

2. Changes for residential off the plan contracts

Amendments which are yet to commence will introduce new vendor disclosure requirements and increase the cooling off period for residential off the plan contracts.

(a) Disclosure and Notification requirements

Under the new laws, vendors will be required to attach an approved form of disclosure statement to the off the plan contract which includes a copy of the draft plan and any other documents prescribed by the regulations. Regulations are not yet in place. However, it is anticipated the regulations may prescribe as part of the disclosure statement documents such as by-laws and a schedule of finishes (where there is building work), unit entitlement allocations and proposed leases. The new vendor disclosure requirements for residential off the plan contracts will operate in addition to the existing requirements under section 52A of the Conveyancing Act.

A failure to provide the required disclosure statement will give the purchaser the right to remedies and relief prescribed by the regulations, and may include the right to rescind the contract and get their deposit back.

At least 21 days before completion of the contract, vendors will be required to:

  • notify purchasers of any material change to particulars contained in the disclosure statement, if applicable; and
  • provide purchasers with a copy of the registered plan and any other documents registered with the plan.

After a purchaser receives the notice of changes, a copy of the registered plan and other registered documents, the purchaser will have the right to rescind the contract if they can establish they would not have entered into the contract had they been aware of the changes or inaccuracies, or the changes or inaccuracies materially prejudice them.

(b) Cooling off period

In a further amendment yet to commence, the cooling off period for off the plan contracts will increase from five to ten business days.

The regulations may prescribe the maximum length of time by which the cooling off period may be shortened with the giving of a certificate compliant with section 66W of the Conveyancing Act.

Russell Kennedy in conjunction with Aitken Lawyers look forward to working with clients to assist them to enter into electronic form land transactions and comply with or review disclosure obligations for off the plan contracts. Click here to view merger announcement.

For more information, please contact Sara Hatcher, Aitken Lawyers on (02) 8987 0000 or Donna Rayner, Russell Kennedy on (03) 9609 1503. 

A Guide to Buying Commercial Property

Buying commercial property (such as a warehouse, office building or retail space) is more complicated than buying a residential property. There are complex contract terms, detailed planning information and additional legal and commercial implications if the premises are leased.

In this article we set out some of the key issues in relation to buying commercial property.

Contract for sale

The contract will typically be prepared by the seller’s lawyer and will set out the terms and conditions for the sale of the property. Essential terms will include, for example, a description of the property, the purchase price, a list of any fixtures or fittings that are included in the sale and the settlement date.

The contract will also include detailed special conditions which relate specifically to the property and the terms on which the seller is offering the property for sale. These special conditions need to be examined and explained to the purchaser by a lawyer who is experienced in the purchase and sale of commercial properties.

The sale of each commercial property is a unique transaction and general terms in the contract will usually be negotiated and varied by the parties.

Name of the purchasing party

In commercial sales, it is important to ensure that the contract correctly identifies the entity buying the property. There are a number of different entities which can purchase commercial property including individuals, individuals in partnership, companies, trustees of discretionary trusts, trustees of superannuation funds or a combination of entities.

If you are thinking about buying a commercial property you should speak with your accountant and lawyer prior to the purchase about the buying entity which best suits your tax or asset protection needs.

If the sale is completed and you decide that someone else should own the property (for example, a trustee of a trust) then this could require a transfer of the property and payment of additional stamp duty and capital gains tax.

Goods and services tax

The sale of commercial premises will often attract GST. Whether or not you are required to pay GST on the sale price of the property can make a significant difference to your cash flow.

GST is generally imposed where a seller is registered or required to be registered for GST and is conducting an “enterprise”. If you are the buyer and registered for GST, you can claim the GST component in your next business activity statement, however, you will need to pay the money upfront to the seller.

There are some exemptions to the application of GST. For example, a seller does not need to apply GST if the property is part of a “going concern”. This might apply if the property is a business premises or a tenanted building. A seller may also be able to use the margin scheme to work out the GST that applies to the sale of the property. This should be detailed in the contract.

When it comes to GST in commercial property it is important to seek advice as it can affect the amount required to be paid at settlement and the stamp duty which is assessed as payable.

Existing leases

A buyer is bound by any leases disclosed in the contract of sale. If you are buying premises subject to a lease you should have the lease reviewed by an experienced lawyer. That is because the specific terms of the lease can have an impact on the commercial viability of the purchase. A lease to a poor tenant, paying under market rent, for a lengthy lease term is a vastly different commercial proposition to a lease to a quality tenant paying market rent.

Due diligence

There are a number of searches and enquiries, including legal, physical and technical, which should be carried out when purchasing a commercial property. These include rates and water search, title search, company search (if the seller is a company), a search of the contaminated land register and land tax search.

A buyer can consider inserting a clause in the contract that the purchase of the property is subject to the buyer being satisfied with its due diligence inquiries, to be undertaken within a specified time.


Buying a commercial property is an important investment decision with significant financial implications. A good lawyer can help you negotiate the sale contract and ensure that your interests are protected during the purchasing process.

If you need assistance with with buying a commercial property do not hesitate to contact the Property Team at Aitken Lawyers on 02 8987 0000.

This article contains general information and is prepared without taking into account your specific objectives.  Before acting on the contents, you should obtain the specific legal advice in relation to your own circumstances.

Take care when buying a property off the Plan

The term “buying a property off the plan” usually refers to purchasing a property that is not yet registered as a separate lot with the government department responsible for land title registrations, or not yet built.

Buying off the plan can refer to the purchase of a block of vacant land that is part of a subdivision, or a house or unit being built for sale where the land on which it stands is not yet registered as a separate title.

Selling property “off the plan” allows a land owner to develop the land in a less-expensive way, as the developer can negotiate lending rates with its Bank at a lower rate if some of the land, houses or units are already sold to buyers.

This is an advantage to the land developer and can also be attractive to a prospective purchaser who buys into an “off the plan” property in the early stages of the development.

There are however risks when buying a property off the plan and a diligent purchaser should take care when entering into this type of purchase contract.

The contract

A contract for the purchase of property “off the plan” is a contract that does not have a precise completion or settlement date due to the incomplete nature of the building project and the subsequent separate registration process for the title to the land or new building.

“Off the plan” contracts generally include several clauses that are different to those in a standard contract for a registered lot. The major difference is the timeframe for the owner to complete the subdivision or the building on the land.

A standard contract will have a precise date for settlement to occur (either an exact date in the future or a completion period such as “60 days after the contract is dated”). An “off the plan” purchase contract will still have a timeframe but it is usually stipulated that settlement will occur within a number of days following completion of the building project and registration of a separate title for the property being purchased.

Off the plan contracts also often include a provision called a “sunset clause” which establishes a period within which the contract must be completed – such as within 24 months of the date of the contract. This means that completion or settlement can be anytime in that 24 month period after the signing of contracts, subject to the land becoming registered as a separate title or the building works being finished. If the date passes the parties can usually terminate the contract.

If you are buying a block of land “off the plan” in a subdivision the contract will usually include a clause allowing a variation in the area of that land that you will purchase on completion of the purchase, often because the local council and the land title registering authority have the final say on the area of the lots in the subdivision and may require the land owner/developer to change the areas. This reduction is usually capped at “not more than 5% of the area” in the contract and although area variations are usually minor there is the possibility your land area may be reduced but the purchase price will not be reduced if the areas are changed.

When houses or units are sold “off the plan” the dwelling is not fully built – construction may not have even started until after you enter into the contract. The usual concerns with this type of purchase are that the progress of the building and the standard of the building work may be different to what you as the buyer contemplated. Remember you cannot see the finished product when you buy “off the plan” as the work will be done after you have signed the contract.

Often the developer will have a demonstration or “display home” to inspect showing you a model of how the buildings should look once completed, or they may have design guidelines and artist’s impressions of the building. These may not resemble exactly the finished building as some changes may be made during construction and you need to ensure that the contract provides some protection here. It is essential that you check the details of features, fixtures and fittings such as the stove, range hood, dishwasher, etc. and ensure that the quality of all finishes is clearly specified in a schedule that should be attached to the contract.

Market fluctuations

You should keep in mind that like the economy, property market conditions fluctuate and with long-term building projects such as luxury high-rise units, the value of the units may change prior to completion of the building and your contract. The price you agreed to pay stays the same regardless.

Paying a deposit

Your deposit could be tied up for some time between signing the contract and settlement.

Paying a deposit by way of a Deposit Bond (not always available in all states) or bank guarantee may be a better choice than a cash deposit when buying “off the plan”. Deposit Bonds are structured in different ways but may allow for you to purchase the bond with a lesser amount than the actual deposit amount, although if you default on the purchase you will owe the bond provider the full deposit.

You should always seek legal advice if a request is made to release the deposit to the owner before the sale is settled. If you do pay a cash deposit you should stipulate in the contract who is holding the money and where it is being held. If possible it should be deposited in an interest bearing account by the deposit holder (often the real estate agent).

The developers financial position

Construction companies and land developers who become insolvent or go bankrupt during construction can leave a trail of destruction behind them. Rising building and material and labour costs may force a site closure and you may be locked into a contract for a home that is not finished within the timeframe you expected.

In some states the builder will be required to have insurance which may provide some compensation for defective work or loss due to a bankrupt builder. You should seek legal advice to see what protection is offered before signing a contract.

While a buyer who is buying property off the plan has the best choice of the land or homes available in a project, and has a longer time to on-sell the property for potential profit, the strategy is not without risk. There are many factors to consider before entering into a contract and our property experts can help guide you through this process.

If you need assistance with buying a property off the plan do not hesitate to contact the Property Team at Aitken Lawyers on 02 8987 0000.

This article contains general information and is prepared without taking into account your specific objectives.  Before acting on the contents, you should obtain the specific legal advice in relation to your own circumstances.

Traps to avoid when buying a Property – pre contract inspections

Buying a home is the biggest investment or financial outlay that most of us will make in a lifetime. It is critical to your financial future that you make well-informed decisions when you purchase a property, whether it be for your own home or an investment.

The Contract for Sale of Land basically follows the common law of “caveat emptor”– let the buyer beware. This means that the purchaser must make their own enquiries and investigate the quality of the improvements on the property before they enter into a contract to buy that property.

A vendor or seller of the property is not allowed to deliberately hide defects or deceive the buyer by fraud but the purchaser should undertake searches and inspections of the property to discover any defects in the property. Failure to do this may result in the buyer losing their deposit and being sued by the seller for breach of contract, or the buyer can end up with a property that needs expensive repairs.

Pre-contract inspections

There are various inspections that a purchaser should get done prior to entering into a contract to buy a property. The number of inspections and searches depend on the location and type of property you are purchasing, the inspections may be different for a residential house in town, a strata unit, vacant land, rural property or industrial property.

In this article we shall look at pre-contract inspections for a standard residential house.

Timber Pest Inspection

In locations which are susceptible to pest infestation a qualified and insured pest inspector will conduct a visual inspection of the property to discover if there is any termite or other pest activity at present or in the past.

More detailed inspection such as thermal imaging or photographs of the walls and bathrooms to highlight any damp areas that should not be present may also be conducted if required. The inspector may also conduct a moisture meter reading of the bathrooms and other wet areas as termites are attracted by damp timber. They will also examine the property for any wood decay, borers or rot that will affect the structure of the home.

Termite damage undiscovered can cost many thousands of dollars to repair. Sometimes if the damage is really bad that part of the house might have to be demolished and rebuilt wreaking damage on your investment.

Building Inspections

A qualified and insured building inspector should be commissioned to inspect any buildings on the property including the house, any garage or other buildings located on the property.

The Inspector will investigate the interior and exterior of the buildings including the most costly items to repair being the roof, kitchen and bathroom/s, looking for any defects that are not usual “wear and tear”.

In an existing home there are usually small defects which accumulate over time due to use and are readily visible but it is the not so visible defects that are costly like a leaking roof that can cost tens of thousands of dollars to repair.

If the inspection reports show issues of concern, other specialist tradesmen may be required to check specific areas or issues.

Plumbing and Electrical

A licensed plumber may be required to inspect drainage issues.

If the property has a septic waste system that is not connected to the town sewerage supply, a plumber’s report should be obtained as a new septic system can cost $10,000+ to install plus excavation works in trenching a faulty system.

If there is any indication that electrical wiring may be faulty or the house is very old, an electrician may be requested to evaluate the property.

Pools and spas

If the property includes a pool or a spa then the pump and any ancillary equipment as well as the pool or spa itself should be investigated to ensure good working order.

Council records

It may be necessary to make application to the local Council for a copy of the building records for the property which will include any development applications (DA), building site records, floor plans and termite protection installed on building.

The DA for the original dwelling house and other buildings should be carefully matched to the existing structure to make sure that the plans approved by council have been complied with. If an owner builds structures on a property that require council approval and the owner builds without an approved DA, the council can lodge an upgrading or demolition order against the property or require it to be approved as “continuing use” after payment of hefty fees to council.

Structures such as decks, large sheds, pools and pergolas can also fall into this category.


A survey shows the dimensions and boundaries of the property. It will also identify any encroachments by structures erected on the land.

In areas inhabited for a long time the fences are often not right on the boundary or there may actually be part of a building encroaching on your land. In more extreme cases, a driveway which appears to be on the property you are buying may actually be on the next door neighbour’s property which would mean you may end up with no access to your new home if the appropriate rights of way are not registered on the land.

Building Certificate

If there are unapproved structures on the property you should request that the seller obtains a building certificate to ensure that council will not look to you after the sale to demolish, rectify or obtain approvals or you should obtain one yourself.

To obtain a building certificate you need to submit an application to Council with a survey.


If you are purchasing a strata property then a full examination of the strata management records should be undertaken by an experienced person. The strata records will show not only the financial details of the administrative and capital works funds but will also show plumbing, drainage, fencing, driveway and other problems that may exist or which have been repaired in the past. Any proposal for additional works or levies should be identified via a strata inspection.

A penny saved is a penny earned

Your lawyer can advise you of the pre-contract inspections which should be carried out for each property. Not doing pre-contract inspections before you buy a property is not only risky but it is also false economy. Considering that the cost of a building and pest inspection for an average house costs about $500-$750 the outlay represents about 0.1% of the purchase price of an average home.

The traps when buying a property are easily avoidable and the risk far outweighs the cost of proper and diligent investigation before you buy.

If you need assistance with Property matters do not hesitate to contact the Property Team at Aitken Lawyers on 02 8987 0000.

This article contains general information and is prepared without taking into account your specific objectives.  Before acting on the contents, you should obtain the specific legal advice in relation to your own circumstances.

Home building laws in NSW – overview of change

Following a lengthy period of public and industry consultation which started in July 2012 the Home Building Act 1989 (‘HBA 1989’) was the subject of an extensive update and in May 2014 the NSW Parliament passed the Home Building Amendment Act 2014 (‘Amendment Act’).

The Amendment Act contained in excess of 50 changes to the HBA 1989 and the changes came into effect in January and March 2015. The Amendment Act has subsequently been repealed however the changes made under that Act remain in force.

What types of amendments were made?

Changes were made across a range of areas including:

  • Changes to licensing provisions;
  • Clarifying what is defined as ‘major defects’;
  • Introducing a requirement for payment schedules for all contracts with a value of over $20,000;
  • Increasing the maximum deposit for work over $20,000 in value to 10% of the contract price;
  • Simplifying home building contract requirements;
  • The establishment of a public register for home warranty insurance certificates; and
  • Re-naming the home warranty insurance scheme.

Why were changes made?

The stated aim of the changes was to modernise practices within the construction industry, reduce red tape and bolster consumer confidence in the building industry and building activity generally across NSW.

The most significant of these changes are discussed in further detail below.

Changes to licensing

Previously a licence was required for all work with a value over $1,000. This threshold has been raised considerably and a licence for building and general trade work is now required for all work costing over $5,000. This figure includes labour and materials. Specialised trades work such as plumbing, electrical and even air conditioning installation still requires a licence regardless of the value of the work being undertaken.

Some types of work that are being carried out as ‘stand alone’ work such an internal painting, work to tennis courts, ponds and other water features no longer need a licence unless they form part of a broader scope of home building work.

A potential prison sentence of up to 12 months duration has been introduced as a sentencing option for persons found guilty of second or subsequent offences of working without a required licence or without statutory insurance.

Licensing provisions have been tightened in an effort to stop the practice of ‘phoenixing’. This is where a company closes down leaving large unpaid debts and then starts up again under a new name – rising from the ashes of the old company like the mythical phoenix after a fire.

If a licensed builder ceases operating or is ‘wound up’ notification must be provided to the Department of Fair Trading within 7 days.


Changes for owner-builders include the requirement for all owners of land to be named on any application for an owner-builder permit. The purpose of this new requirement is to prevent people using owner-building licensing as a back door way to carry out un-licensed commercial building work.

Under the changes a permit for dual occupancy will not be granted to would be owner-builders except in special circumstances.

Owner-builders are not able to obtain statutory insurance and if a property is sold during the legislated warranty period the contract for sale must clearly state that there is no insurance. Any contractors working for an owner-builder are still required to provide a certificate for statutory insurance if their work costs in excess of $20,000.

Owner-builders must be able to show proof of having undertaken basic work health and safety training and if work is valued at over $20,000 attendance at an owner-builder course is mandatory.

Home Building Compensation Fund

The Home Warranty Insurance Scheme is now called the Home Building Compensation Fund and a public register is now available online to enable consumers to check a builder’s or tradesperson’s insurance. The register also provides details to the public of any previous claims on a property.

Defects, disputes and statutory warranty periods

Major defects are now covered by a 6 year warranty and any general defects that are not classified as a major defect continue to be covered by a 2 year warranty period.

Major defects are defined as being something that is a major element in a building AND which prevent all or part of the building form being either lived in or used for its intended purpose OR which threaten the collapse or destruction of the building as a whole of part of it.

Rectification should always be considered by tribunals and courts as the preferred outcome in any dispute and NSW Fair Trading Inspectors are able to issue Rectification Orders which require a consume to pay their builder any money owed under a contract. The reasoning behind this provision is that it should assist in ensuring that building rectification work does not stall. In addition, home or property owners are prohibited from unreasonably refusing a builder access to a property for the purpose of carrying out rectification work.

The definition of what is completion for strata buildings has changed so that completion will now occur only when a certificate is issued which allows the whole building to be used and occupied.

Finally, a tradesperson/licensee may have a legal defence in any proceedings for breach of statutory warranty if they relied on specialist advice of an independent professional provided that professional was engaged by the property owner.

Changes to contract requirements

More detailed contracts are now required for work with a value of $20,000 or more (previously the threshold was a much lower $5,000). Previously for work over $20,000 a maximum 5% deposit was allowed. However, builders are only able to request a maximum of 10% deposit on any project regardless of size.

The Consumer building guide which is required to be given by builders and tradespeople to consumers prior to entering into a building contract, has also had an overhaul and has been simplified to provide essential information for both builders and owners on their respective rights and responsibilities.

So while some things have not changed very much or at all other requirements particularly in respect of licensing thresholds have increased significantly. Overall the aim of less red tape and greater confidence and transparency appears to be being met. However, as with any area of construction and building work the devil is often in the detail and if you are unsure of how the changes may affect you or your building work then we recommend you seek advice sooner rather than later.

It is always better to be proactive in ensuring regulatory compliance than being reactive and leaving things until the last minute to sort out. Delays in construction cost money and can often be avoided with good advice and forward planning.

If you need assistance with Property matters do not hesitate to contact the Property Team at Aitken Lawyers on 02 8987 0000.

This article contains general information and is prepared without taking into account your specific objectives.  Before acting on the contents, you should obtain the specific legal advice in relation to your own circumstances.