Electronic conveyancing updates
The ACT Government has issued a consultation paper and sought submissions on draft legislation which will introduce electronic settlement and registration in the ACT, including the introduction of electronic titles. This is consistent with the adoption of the Electronic Conveyancing National Law by all Australian States and the Northern Territory. The consultation period closed on 15 November 2019 and we expect the relevant Bills will be brought before the ACT Legislative Assembly in 2020.
The Land, Explosives and Other Legislation Amendment Act 2019 (Qld) has amended the Land Act 1994 (Qld) to abolish paper certificates of title in Queensland from 1 October 2019. From that date, paper certificates of title will not be evidence of an indefeasible title and the electronic file maintained by the Queensland Land Titles Registry will be the legal record of ownership of land. It will therefore no longer be possible to create an equitable mortgage by providing a paper certificate of title to the mortgagee, but existing equitable mortgages may still be enforced by court order.
The Natural Resources and Other Legislation Amendment Act 2019 (Qld) has amended the Land Title Act 1994 (Qld) and the Land Act 1994 (Qld) so that from 30 September 2019, any person who witnesses the signature of an individual on a Queensland Land Titles Registry form must:
- verify the identity of the individual;
- ensure that person is entitled to sign the form; and
- retain a record of the steps taken to verify the identity of the individual and their entitlement to sign for 7 years.
These new requirements are designed to bring paper transactions into line with electronic transactions.
It should be noted that the new requirements apply to anyone witnessing the signing of a Queensland Land Titles Registry form, which may not necessarily be a lawyer (external or in-house).
For more information, see New witnessing requirements for Queensland land registry documents.
NSW: Real Property Regulation 2019
The Real Property Regulation 2019 (NSW) commenced on 1 September 2019, replacing the Real Property Regulation 2014 (NSW) with minor changes.
This regulation includes provision for the following matters:
- plans and any other documents that have been lodged for registration by the Registrar General, the original plans and other documents must be retained for a period of 7 years;
- a mechanism for the adjustment for inflation of fees payable to the NSW Land Registry (as prescribed by the Real Property Act 1900 (NSW)); and
- the Registrar-General may pay an amount up to $500,000 in settlement of claims against the Torrens Assurance Funds without further authorisation from the Minister of Customer Service.
NSW: Sale of land updates
On 28 October 2019, the NSW Law Society published the new 2019 edition of its form of Contract for the Sale and Purchase of Land. The 2019 edition addresses, amongst other things, the residential off the plan reforms which made amendments to the Conveyancing Act 1919 (NSW) and the Conveyancing (Sale of Land) Regulation 2017 (NSW) by the Conveyancing Legislation Amendment Act 2018 (NSW) and the Conveyancing (Sale of Land) Amendment Regulation 2019 (NSW).
From 1 December 2019, for all residential off the plan sales there will be:
- new mandatory disclosure requirements which require a vendor to attach a "Disclosure Statement" to all contracts issued (For more information, see NSW developers have one month to get ready for new Disclosure Statement and sale of land contracts);
- new purchaser rescission rights as a purchaser can rescind a contract for a residential off the plan contract if the "Disclosure Statement" is not attached to the off the plan contract before it is exchanged;
- new purchaser compensation rights as an alternative to rescission where a purchaser is materially prejudiced by changes to what was disclosed in the residential off the plan contract (e.g. reduction in size of the lot) ; and
- an extension of the cooling off period from 5 business days to 10 business days. Importantly the extension to the cooling off period will not apply to contracts for established residential homes.
For a detailed summary of the main changes between the 2018 and 2019 edition contracts, see the NSW Law Society summary of main changes made in contract for the sale and purchase of land 2019 edition (from the 2018 edition).
NSW: Proposed expansion of landholder duty and discretionary trust exemptions
The State Revenue Legislation Further Amendment Bill 2019 (NSW) proposes to expand the definition of "land" in relation to landholder duty to include "fixed goods" whether or not those goods are fixtures at law, to broaden duty on put and call options, and to introduce a new exemption from surcharge purchaser duty and surcharge land tax for discretionary trusts.
For more information, see NSW grows its duty base with significant expansion of landholder duty and Review all discretionary trusts now following changes to surcharge purchaser duty and surcharge land tax.
NSW: Vendor breach of contract for sale
In El Ali v Tritton  NSWCA 111, the NSW Court of Appeal acknowledged that, although the usual time damages are assessed is at the time of breach, the court does have discretion in this regard.
In this case, El Ali (as Vendor) entered into a contract to sell vacant land to Tritton (as Purchaser) in July 2015. The Vendor refused to complete the contract and failed to comply with a notice to complete issued by the Purchaser. The Purchaser still wished to purchase the vacant land and did not terminate the contract. The Vendor's mortgagee took possession of the vacant land and transferred its interest to a company known as JGYM. The Purchaser then commenced proceedings for specific performance and attempted to negotiate with JGYM to purchase the vacant land. Negotiations between the Purchaser and JGYM ultimately failed and JGYM sold the property to a third party. The Purchaser then sued the Vendor for damages which included increased building costs, additional rent and interest on their mortgage claiming that the damages were to be assessed at the time the property was sold by JGYM to the third party.
The NSW Court of Appeal acknowledged that the usual time at which losses are assessed is at the time of breach but that the court had some discretion in this regard. In these circumstances, the NSW Court of Appeal was prepared to assess damages at the time the property was sold to the third party because the Purchaser:
- acted swiftly and reasonably in seeking specific performance; and
- at no time terminated the contract entered into with the Vendor.
Despite this, the NSW Court of Appeal found the claim for increased building costs, additional rent and interest on their mortgage too remote and not recoverable.
The key takeaways from this case are:
- when a party to a land sale contract breaches their obligations it is important to respond quickly and reasonably, whether that means terminating the contract or commencing proceedings seeking specific performance;
- be aware that damages for breach of contract will not always be assessed at the time of breach as courts will consider the relevant circumstances. This can mean that damages will be higher than expected; and
some claimed damages will not be awarded by a court if they are considered to have not reasonably been in contemplation of both parties, at the time they made the contract, as the probable result of the breach of it.
VIC: New General Conditions in Contract of Sale
The Law Institute of Victoria and the Real Estate Institute of Victoria have issued a new form of General Conditions for Contracts of Sale in Victoria. While some General Conditions remain unchanged (though their numbering may have changed), new provisions have been introduced regarding, amongst other things, electronic signature, deposit bonds or bank guarantees in lieu of cash deposits, Duties Online, electronic settlement, foreign resident capital gains withholding, GST withholding, building reports and pest reports. The operation of the Particulars of Sale have also been slightly amended so that certain General Conditions will apply only if certain boxes are checked.
VIC: Retail leasing updates
The Victorian Small Business Commission has issued a new information brochure which landlords are required to issue to tenants as soon as negotiations commence for retail leases.
A new Ministerial Determination excludes farm leases from the operation of the Retail Leases Act 2003 (Vic) effective from 29 October 2019.
In the recent decision of Richmond Football Club Ltd v Verraty Pty Ltd  VSC 597, the Victorian Supreme Court held that the application of the Retail Leases Act 2003 (Vic) is to be determined at the time the lease is entered into and, if the Act applied at that time, then a change in the circumstances surrounding the lease (eg. occupancy costs increasing to over $1 million per year) will not result in the lease ceasing to be subject to the Act for the remainder of the term. However, whether a lease can "jump in" or "jump out" of the Act upon renewal is yet to be settled and it may depend on the express inclusion or exclusion of provisions in the Act which are implied into retail leases.
The Retail Leases Amendment Bill 2019 (Vic) which received its second reading in the Victorian Legislative Assembly on 30 October 2019 proposes to:
- require retail tenants to be informed of the proposed new rent before the lease is renewed;
- allow tenants 14 days (rather than 7 days) to review a proposed lease;
- set a maximum 30-day period for the return of security deposits from landlords;
- confirm the ability of landlords to pass on to tenants the costs of maintaining essential safety measures (ESMs); and
- establish a cooling off period for the renewal of retail leases in certain circumstances.
VIC: combustible cladding
The Victorian Government has introduced the Building Amendment (Cladding Rectification) Bill 2019 (Vic) which includes provisions which will:
- introduce a new building levy for new permits for multistorey buildings valued at more than $800,000 which was foreshadowed earlier this year to partly fund the cladding rectification program to be overseen by Cladding Safety Victoria; and
- enable the government to step-in on behalf of owners corporations to pursue builders to recover the costs of rectifying combustible cladding where the government through Cladding Safety Victoria has paid for those costs. Funds recovered through this process will be reinvested in Cladding Safety Victoria's program. Apartment owners will still be able to take action against builders for other defects.
VIC: Land tax amendments
The State Taxation Acts Further Amendment Act 2019 (Vic) (except Part 3 regarding gambling regulation) commenced on 20 November 2019.
The amendments made by this Act include:
- extending vacant residential land tax to properties that remain uninhabitable for 2 years or more;
- reforming the primary production land exemption for land in an urban zone in greater Melbourne to require a connection between the landowner, the business of primary production and the relevant land; and
- excluding beneficiaries of implied or constructive trusts as owners for the purposes of the principal place of residence and primary production land exemptions.
SA: New "bricklet" investments
In an attempt to make property investment more affordable, the South Australian government has announced plans to introduce a new system of property investment in South Australia with the assistance of international blockchain firm Lakeba Group.
The new system will break up a land title into "bricklets" which may be bought and sold separately from other bricklets and the larger title through an online market. It is foreshadowed that owners of individual bricklets will be noted on the title to a property on the Torrens register and therefore have the benefit of indefeasibility of title.
For more information, see SA-based innovation to revolutionise property investment bricklet by bricklet.
ACT: Building and Constructions Legislation Amendment Bill 2019
The Building and Construction Legislation Amendment Bill 2019 (ACT) was passed in the ACT Legislative Assembly on 29 November 2019. The Bill notably provides for:
- enforceable undertakings for rectification of defective works under the Construction Occupations (Licensing) Act 2004 (ACT);
- introduction of personal director and executive officer liability as proposed in the Improving the ACT Building Regulatory System including liability for rectification orders that have not been complied with; and
- the management of individual nominees of company and partnership building licensees and constructions services providers.
A report prepared by the Standing Committee on Economic Development and Tourism on an inquiry into the Building and Construction Bill in November recommended continued consultation with stakeholders and the wider community and clarification of the proposed significant changes to director and executive officer liability and rectification orders. Despite this, the Building and Construction Bill was passed without amendment.
ACT: Unit Titles Legislation Amendment Bill 2019
The Unit Titles Legislation Amendment Bill 2019 (ACT) was introduced to the ACT Legislative Assembly on 28 November 2019. The Bill notably proposes to amend:
- the requirements for disclosure statements in contracts for sale and the ability to rescind contracts if the requirements are not met;
- the requirement to register a Building Management Statement;
- the special resolution threshold under the Unit Titles (Management) Act 2011 (ACT); and
- requirements relating to the keeping of pets.
For more information, see the ACT Legislation Register.