Sale of Land Act Amendments - Victoria

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Sale of Land Act Amendments

The changes, which we summarise below, are particularly significant for vendors and developers.

1. Cooling off rights expanded

The first change is that obtaining prior legal advice will no longer remove the operation of the 3 day cooling off period. Therefore, except in the case of sales by auction, most purchasers of residential property will continue to have their cooling off rights even though they have obtained legal advice on the contract.

2. Off the plan – no investment in joint accounts

The second change is in relation to off the plan sales. The parties to the contract (ie the vendor and the purchaser) will not longer have the option of opening a special purpose account in their joint names, for investment of the deposit.

Therefore any deposit received in an off the plan sale can only be held by the Estate Agent and/or Solicitor in their trust account. The funds can be invested to earn interest, but that can only now be done whilst remaining under the trust account umbrella.

3. Off the plan - new warnings to be on contracts

The last change is to require 3 prominent warnings to be placed on the front page of the sale contract for off the plan sales, namely that:

1. the deposit is a negotiable amount and does not have to be 10%;
2. a considerable amount of time will pass from the time the contract is signed to the purchaser becoming the owner of the property; and
3. the value of the property may change from the date of the contract to the date the purchaser becomes the owner of the property.

One proposed amendment which seems to have been discarded was to amend the SLA to allow for a deposit of up to 20% in on off the plan contracts instead of the current limit of 10%. It may well be that such a change would have been of limited benefit since, the proposed change did not also include any proposed change to the current common law position on what constitutes a “penalty”. As a consequence, even if a purchaser paid the 20%, it was unlikely the vendor could retain any more than 10% if the contract was terminated for purchaser default, unless the vendor could demonstrate actual loss of 20% or more.

The changes are clearly beneficial to prospective purchasers of residential properties. It is noted that these increased consumer protections make no distinction between a first time buyer and a well seasoned experienced investor, which on one view it should.

Lisa Cody
Partner
T: +61 (0)3 9321 9871
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Lou Farinotti
Managing Partner - Melbourne
T: +61 (0)3 9321 9860
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Disclaimer

The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.