Property News Alert: New 2016 Edition of the NSW Contract for Sale and Purchase of Land
Due to an unprecedented number of recent changes in the conveyancing practice in NSW, the 2005 and 2014 editions of the Contract for Sale and Purchase of Land with copyright to the Law Society of NSW and the Real Estate Institute of NSW (Contract) should no longer be used for contracts exchanged on or after 1 July 2016. Rather the new 2016 edition of the Contract launched on Monday 30 May 2016 should be used, and will be available only in electronic format.
The significant changes that precipitate the new 2016 Edition of the Contract include:
- Pursuant to the new sub-division 14D, of Schedule 1 to the Taxation Administration Act 1953 (Cth), where the market value of the property is $2 million or more, the purchaser is obliged to comply with a foreign resident capital gains withholding payment obligation (regardless of whether the vendor is in fact a foreign resident), in which the purchaser must withhold 10% of the price at settlement and remit this to the Australian Taxation Office (ATO), unless the vendor supplies to the purchaser a clearance certificate. A lesser amount may be withheld if the vendor supplies to the purchaser a variation from the ATO authorising less to be withheld.
- Pursuant to the Swimming Pools Act 1992 (NSW) and new regulations made in March 2016, vendors of property being single freehold or strata schemes with no more than two lots, that contain a swimming pool or spa, are required to attach to the Contract:
- A valid certificate of compliance issued under section 22D of the Swimming Pools Act 1992 (NSW); or
- A relevant occupation certificate (less than 3 years old) and evidence that the swimming pool is registered under Part 3A of the Swimming Pools Act 1992 (NSW); or
- A valid certificate of non-compliance issued under clause 18BA of the Swimming Pools Regulation 2008.
- Pursuant to the Conveyancing Amendment (Sunset Clauses) Act 2015 (NSW), which came into effect on 2 November 2015, vendors are required to either obtain the consent of all the purchasers before they can rescind an “off-the-plan” contract in reliance of the sunset clause for not registering the new titles by an agreed date in the Contract, or alternatively, obtain the permission of the Supreme Court to rescind.
In addition to these changes, there are miscellaneous other changes that can be found on the Law Society of NSW website.
There potentially may be more editions to the Contract, to cover more changes in the pipeline such as the changes to the operation of land tax certificates requiring vendors to obtain a land tax certificate and serve it on the purchaser before completion, and changes to strata schemes.
Clients should be aware that the 2005 and 2014 editions of the contract are expected to be no longer sold after 30 June 2016, and these editions should not be used for contracts exchanged on or after 1 July 2016. It is recommended that you use the 2016 edition of the Contract to cover the multitude of issues, or if you want to use older editions, then you will need to consider inserting additional conditions to address the significant changes.
Gary Newton, Partner
Henry Yuan, Paralegal