ByLawyers News and Updates

Adjustment for cladding agreements

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By Russell Cocks, Solicitor

First published in the Law Institute Journal

Recent amendments to the Local Government Act mean that solicitors acting for buyers and sellers of real estate will need to take into account any charges recorded against the property relating to funding for cladding rectification.

Recent concern about defective cladding used in the construction of high-rise residential buildings has resulted in the government adopting a legislative solution that may provide some solace to the unfortunate unit owners who are faced with massive rectification costs, but it also has an impact on third-party purchasers of such properties. After a lengthy inquiry in relation to the cause and consequences of the defective cladding material it became clear that any solution that depended upon allocation of blame would involve years of legal proceedings and an immediate solution had to be found to allow the owners of units affected by the defective cladding to move on with their lives.

Responsibility for administration of the solution has been allocated to municipal Councils, with a new Part 8B inserted into the Local Government Act. This authorises Councils to enter into a ‘cladding rectification agreement’ with the owner of rateable land (or an Owners Corporation) and a lending body, presumably a conventional financier. Council may also be the lending body, but it is difficult to imagine, in the short term at least, that Councils will assume this entrepreneurial role. Thus, the standard agreement will be tripartite, between the owner (or Owners Corporation), the Council and a lender.

The agreement will provide that the lender will advance the funds to pay the rectification works and Council will levy a charge on the land to recover the loan advance, interest and fees associated with the levy by instalment over a period of not less than 10 years. Thus, in a perfect world, the owner (or Owners Corporation) will be happy as the cladding will have been rectified, the lender will be happy as the loan, plus interest will have been repaid and Council will be happy as it will have charged an administrative fee. But we do not live in a perfect world.

Owners will still feel aggrieved by being required to bear the cost of rectifying a building defect, lenders will inevitably face some bad debt scenarios and Councils will be regarded as the bad guys by all other parties simply because Councils put the deals together. How dissatisfied owners relate to each other in an Owners Corporation environment is another can of worms and time may reveal that the solution turns out to be worse than the problem.

Given that Councils must be satisfied about the amounts due pursuant to any rates, taxes or levies and any mortgage relating to the land before entering into an agreement, it is difficult to see, particularly in an Owners Corporation environment that requires 75%-member approval, these agreements being particularly easy to set up, let alone administer for 10 years. The Act is silent as to whom the loan amount is paid and when repayments are to be made to the lender, presumably leaving it to each particular agreement to deal with these ‘site specific’ details.

However, the property lawyers concern is not so much as to how the agreements will work between the original parties, but how they will affect departing and incoming owners. Presuming that a 10-year levy has been struck, with quarterly instalments link to normal rates, what are the duties of the vendor and expectation of the purchaser in relation to the treatment of the amounts due under the levy?

The Act (s.185L) treats the cladding rectification levy as a “service charge”. Section 162 authorises the imposition of a service charge and s.185L(6) requires a cladding rectification charge to be paid by instalments. A vendor is obliged to disclose statutory charges pursuant to s.32A(b) Sale of Land Act and also charges “for which the purchaser will become liable in consequence of the sale” pursuant to s.32A(c). Disclosure of current charges (and any arrears) may be achieved by annexing a rate notice, a land information certificate or giving a not-more-than estimate, but the vendor is also obliged to disclose future liabilities due under the cladding rectification charge and information provided by Council may be crucial in this regard.

Any arrears under the levy will be the vendor’s responsibility, the current instalment will be adjusted between the parties at settlement and the outstanding levy will become the responsibility of the purchaser as a charge on the land (s.156(6)).

By s.175, a purchaser may continue to pay charges by instalments. A purchaser will therefore need to adjust the price that the purchaser is prepared to pay for the property to take account of the outstanding cladding rectification levy that the purchaser will become liable for and full disclosure in this regard is essential so as to allow the purchaser to set its price.

Tips

  • cladding rectification charges may apply to multi-storey units
  • cladding rectification charges must be disclosed by vendors
  • purchaser will be liable for charges due after settlement

Foreign Buyers Duty – Western Australia

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From 1 January 2019 Foreign Buyers Duty applies, being additional duty imposed on certain transactions and acquisitions involving foreign persons or entities acquiring residential property in Western Australia. An additional duty of 7% is imposed on direct acquisitions (foreign transfer duty) and indirect acquisitions (foreign landholder duty) of residential property by foreign persons.

Foreign Buyers Duty will not apply to purchases of commercial, industrial or mixed used properties used primarily for commercial purposes.

An exemption from foreign transfer duty and foreign landholder duty for residential developments applies where certain conditions are met.

A Foreign Transfer Duty Declaration form is used to declare whether each purchaser or transferee is a foreign person. This form must be completed by each person acquiring an interest in any land in Western Australia.

The By Lawyers Purchase of Real Property (WA) guide has been updated as follows:

  • Comprehensive commentary has been added on Foreign Buyers Duty.
  • New forms added to the matter plan include Foreign Transfer Duty Declaration, Foreign Landholder Duty – Developer Exemptions and Foreign Transfer Duty – Developer Exemptions.
  • The To Do List – Purchase of Real Property now includes an item on the obligation to complete a foreign transfer duty declaration form.

By Lawyers keep on top of changes in the law so you can focus on getting the job done.

Electronic lodgement of leases – NSW

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From 10 December 2018 electronic lodgement of leases commences via PEXA.

Summary of the procedure for electronic lodgement of leases

The annexures to the Real Property Act lease form are prepared in the usual way outside PEXA and then uploaded for attachment to the RPA lease form in PEXA .

The RPA lease form is created in PEXA, the annexures attached and the lease document is then signed and lodged electronically.

A lease may be lodged electronically:

  • as a stand-alone registration;
  • in combination with a transfer of land; and
  • in a series with other leases.

Sub-leases, surrenders of lease and variations of lease are not yet available in PEXA. This functionality is expected mid-2019.

The Office of the Registrar General has granted a partial waiver of a subscriber’s obligations to comply with rule 1 of Schedule 3 – Certification Rules of the Model Participation Rules relating to verification of identity for lessors and lessees, in that there is no requirement to take reasonable steps to verify the identity of the parties. The waiver will continue until either the Model Participation Rules are amended or the partial waiver is revoked.

By Lawyers Leases (NSW) guide updated for electronic lodgement of leases

The relevant sections of the By Lawyers Leases (NSW) commentary, as well as the following applicable precedents, has now been updated for the electronic lodgement of leases:

  • To do list; and
  • Retainer instructions.

A new folder E. If required – Electronic lodgement has been added to both the Act for lessor and Act for lessee matter plans and includes:

  • A brief explanation of the transition to E-conveyancing;
  • Letter to lessor/lessee enclosing lease to be registered and client authorisation; and
  • Client Authorisation forms.

Enjoy practice more with By Lawyers!

New owners corporations regulations – VIC

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On 2 December 2018 the Owners Corporations Regulations 2007 were replaced with the Owners Corporations Regulations 2018, providing new owners corporations regulations which include amendments to the model rules for an owners corporation in Schedule 2 of the regulations.

A notable amendment to the model rules concerns changes to the external appearance of a lot and notification requirements for renovations to a lot.

Rule 5.2 requires lot owners to obtain the written approval of the owners corporation before changing the external appearance of their lot. An owners corporation cannot unreasonably withhold approval, but may give approval subject to reasonable conditions to protect the quiet enjoyment of other lot owners and the structural integrity or the value of other lots and/or common property.

Rule 5.3 provides that an owner or occupier of a lot must notify the owners corporation when undertaking any renovations or other works that may affect the common property and/or other lot owners’ or occupiers’ enjoyment of the common property.

The commentary and relevant precedents in the By Lawyers Conveyancing (VIC) guide – and the applicable sections of our very popular Reference Manual 1001 Conveyancing Answers (VIC) – have all been updated accordingly in consultation with our Victorian conveyancing author Russell Cocks.

 

Mandatory electronic lodgement from 1 December – WA

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Are you ready for mandatory electronic lodgement?

From 1 December 2018, all new eligible stand-alone transfers, caveats and withdrawal of caveats, and any lodgement case consisting of eligible discharges, transfers, mortgages, caveats and withdrawal of caveats must be lodged electronically.

Electronic lodgement is mandatory from this date and paper lodgement will not be accepted for the above scenarios, unless an instrument cannot be lodged using an Electronic Lodgement Network and a completed Request to accept paper lodgement form is attached. The form must be completed by the party requesting paper lodgement, and that party must also ensure that they hold evidence that supports their request. The form does not need to be used in a lodgement case that includes an additional document not listed above e.g. transmission, survivorship application.

The By Lawyers Conveyancing (WA) Publication has been updated accordingly to assist WA solicitors and conveyancers with the transition to electronic conveyancing.

For further details, see the ‘E-Conveyancing’ section of the By Lawyers conveyancing commentaries and our related article ‘A brief explanation of the transition to E-conveyancing’, which includes information on how to get connected, both accessible from the Matter Plan in our Conveyancing Guides.

 

Cladding rectification agreements – Sale and Purchase – VIC

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Amendments to the Local Government Act 1989 mean that solicitors acting for buyers and sellers of real estate now need to take into account any charges recorded against the property relating to funding for cladding rectification.

Concern about defective cladding used in the construction of high-rise residential buildings has resulted in the government adopting a legislative solution intended to provide some solace to unit owners who are faced with rectification costs, but it also has an impact on third-party purchasers of such properties.

Responsibility for administration of the solution has been allocated to municipal Councils, with a new Part 8B inserted into the Local Government Act 1989, which came into operation on 30 October 2018. This authorises Councils to enter into a ‘cladding rectification agreement’ with the owner of rateable land, or an Owners Corporation, and a lending body – presumably a conventional financier. Council may also be the lending body, but it is difficult to imagine, in the short term at least, that Councils will assume this role. Thus, the standard agreement will be tripartite, between the owner or Owners Corporation, the Council and a lender.

These agreements provide that the lender will advance the funds to pay the rectification works and Council will levy a charge on the land to recover the loan advance, interest and fees associated with the levy by instalments over a period of not less than 10 years.

Adjustment on purchase

In relation to the effect on departing and incoming owners, s 185L treats the cladding rectification levy as a ‘service charge’. Section 162 authorises the imposition of a service charge and s 185L (6) requires a cladding rectification charge to be paid by instalments. A vendor is obliged to disclose statutory charges pursuant to s 32A (b) of the Sale of Land Act 1962 and also charges ‘for which the purchaser will become liable in consequence of the sale’ pursuant to s 32A (c). Disclosure of current charges and any arrears may be achieved by annexing a rate notice, a land information certificate or giving an estimate, but the vendor is also obliged to disclose future liabilities due under the cladding rectification charge and information provided by Council will be crucial in this regard.

Any arrears under the levy will be the vendor’s responsibility, the current instalment will be adjusted between the parties at settlement and the outstanding levy will become the responsibility of the purchaser as a charge on the land: s 156 (6).

Section 175 allows a purchaser to continue to pay charges by instalments. A purchaser will therefore need to adjust the price to take account of the outstanding cladding rectification levy that the purchaser will become liable for and full disclosure in this regard is essential so as to allow the purchaser to set its price.

The Sale and Purchase commentary within the By Lawyers Conveyancing (VIC) Guide has been updated accordingly.

Conveyancing – signing electronic mortgage documents – NSW

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Procedure for signing electronic mortgage documents for mortgages over real property has been clarified in NSW with amendments to the Real Property Act 1900 made by the Conveyancing Legislation Amendment Act 2018 which commenced on 22 November 2018.

The amendments provide:

  • That where a mortgage is lodged for registration, any other document supporting that instrument, such as a caveator’s consent, may also be signed electronically: s 36 (1F) Real Property Act 1900; and
  • That a mortgage is acceptable for registration in NSW where it is signed by the mortgagee alone (that is, not also signed by the borrower and witnessed), provided that the mortgagee certifies that it holds a mortgage granted by the borrower on the same terms as that which is lodged for registration: s 56 (1A) Real Property Act,

The amendments reflect practice which has developed following the introduction of the National Mortgage Form.

The Commentary in the By Lawyers Mortgages (NSW) Guide has been updated accordingly.

Conveyancing – amendments in support of eConveyancing – NSW

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Amendments to the Conveyancing Act 1919 and the Real Property Act 1900 by the Conveyancing Legislation Amendment Act 2018, in support of eConveyancing, commenced on 22 November 2018. These amendments address the following key issues concerning electronic conveyancing:

  • Clarifications regarding the application of the Conveyancing Act 1919 and the Real Property Act 1900 to electronic form contracts and electronic signatures – s 6C, 23C (2) and 54A (4);
  • If a sale of land contract is in electronic form then those documents which must be attached to satisfy vendor disclosure obligations may also be in electronic form.
  • Where a registry instrument (dealing, memorandum, caveat or priority notice) is lodged for registration, any other document supporting that instrument may be signed electronically: s 36 (1F) Real Property Act 1900;
  • A client authorisation produced in electronic form may also be electronically signed: s 107 (1A) Real Property Act 1900; and
  • Deeds are now able to be electronically signed and attested – Section 38A of the Conveyancing Act 1919 states that a deed may be created in electronic form and electronically signed and attested in accordance with Part 3. Notably, this includes leases.

The Sale and Purchase Commentaries as well as 1001 Conveyancing Answers within the By Lawyers Conveyancing Guide (NSW), which already cover eConveyancing in detail, have been updated to reflect these changes in support of eConveyancing.

The Commentary within the By Lawyers Leases (NSW) Guide has also been updated.

Author review – Conveyancing – Sale and Purchase – SA

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The By Lawyers Conveyancing SA Guide has been reviewed and updated to ensure that the commentaries and precedents are in line with current law and conveyancing practice, including electronic conveyancing.

The extensive review was performed by our author Jess Caire. As with all our authors, Jess takes a practical approach, drawing on her considerable experience to cover all aspects of procedure, with a focus on practical tips that will help solicitors and conveyancers confidently run a sale or purchase matter to completion. The sale and purchase matter plans cater for both ‘sale by agent’ and ‘private sale’ engagements.

We invite you to explore this updated publication and to consider the wealth of assistance the guide offers for solicitors and conveyancers acting in the sale and purchase of residential property in South Australia.

By Lawyers Contract of Sale of Land VIC – Explanatory Memorandum

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BY LAWYERS CONTRACT OF SALE OF LAND (VIC) – INCLUDING s 32 VENDOR STATEMENT

Russell Cocks and By Lawyers have come together to release a new form of Contract of Sale of Land in Victoria which is available to LEAP users who take up the By Lawyers companion product and also by subscription to the By Lawyers website for non-LEAP users. This new contract is intended to make standard conveyancing in Victoria more efficient by smoothing the bumps in the conveyancing highway arising from shortfalls in the existing standard contract.

Russell is ideally placed to make these changes having been one of the authors of the standard contract over the last 25 years. Russell was largely responsible for the substantial changes achieved in the 2008 review of the standard contract and sees this NEW CONTRACT as a culmination of the desire to achieve efficiency in the standard conveyancing process. The advent of electronic conveyancing makes this the perfect time to make these changes.

First, a word about the ‘standard’ contract. For decades, a committee of the Law Institute of Victoria provided the Victorian government with a form of contract that was adopted in Regulations as the form of contract to be used by real estate agents if the proposed contract was not provided to the real estate agent by a solicitor or, more recently, a conveyancer. In practice, most contracts are provided to agents by solicitors and agents and, by and large, those contracts are in the standard form because that form has been adopted by the various proprietary software providers. The Law Institute of Victoria and Real Estate Institute of Victoria both produce a version of that contract, for which they charge, but it is the format, rather than the content, that is subject to copyright.

In September 2018 the Law Institute contract became more confusing. Because the LIV form must be based on the regulated form, the LIV cannot change any of the 28 General Conditions. So, the LIV contract now has 28 General Conditions and 12 Special Conditions, some of which in fact change the General Conditions. The NEW CONTRACT simply has 28 General Conditions, although users are entitled to introduce additional Special Conditions, but not such as to derogate from the General Conditions (see below).

The guiding principle for the successive authors of the LIV standard form has been EVENHANDEDNESS – a awkward word but nevertheless a perfect description of the desire for the contract to treat the vendor and purchaser EQUALLY. Give that it is usual practice for the vendor to prepare the contract it would be open to the vendor to produce a contract that unfairly favours the vendor to the detriment of the purchaser. This would lead to inefficiencies, with the purchaser having to negotiate a whole raft of unfair terms before even considering signing the contract. A standard, widely accepted contract avoids these inefficiencies and the NEW CONTRACT will honour those principles.

Another efficiency associated with a standard contract is that all participants in the conveyancing process know what the standard contract says. The 2008 contract sought to enshrine this principle by forbidding amendment of the General Conditions otherwise than by Special Condition so that unexpected changes could not be inserted into the General Conditions. This was achieved by the inclusion of a warranty in the contract and has proven to be successful in preventing changes to the General Conditions. However, the ability to amend by Special Condition has led to a return to past inefficiencies caused by the inclusion of pages of Special Conditions and this is the first important change to be made by the NEW CONTRACT.

The warranty about changes to the General Conditions will be a NON-DEROGATION warranty. Special Conditions can be added to the contract but they cannot DEROGATE from the rights created by the General Conditions.

This will prevent the pages and pages of Special Conditions that have become common in recent years that are designed to remove General Condition 23, or General Condition 8, or change the penalty interest rate to plus 4%, or change the number of bank cheques to 10. Such Special Conditions are not really Special Conditions at all, they are just attempts by some participants in the industry to give their clients an unfair advantage. This exercise totally defeats the advantage of a standard form contract and robs us all of the efficiency benefits that a standard form provides. By agreeing to use the NEW CONTRACT you will acknowledge that you are satisfied that your vendor client is adequately protected by the General Conditions and that your purchaser clients are likewise protected.

In practice, these interminable Special Conditions are inconsequential as they usually address issues already addressed in the standard contract or else are only relevant if default occurs and then simply produce an argument about what the Special Condition actually means. For this so-called benefit, we have to wade through pages of guff and advise our clients about all sorts of unlikely outcomes, thereby losing the benefit of a standard contract. ENOUGH!

However, proper Special Conditions will be permitted. Provided that they do not derogate from the General Conditions, Special Conditions still have a role to play in the contract. These may address aspect of the transaction that are truly unique or special to a particular contract or it may be a set of Special Conditions that relate to a specific type of contract – such as an off the plan contract that will result in the creation of an owners corporation and the vendor wishes to deal with issues that will arise after registration of the plan, or a contract that requires the creation of a covenant. The intention is not to dumb down the contract, it is to remove the unnecessary guff that undermines the efficiency of a standard contract.

When you consider that 90% of contracts relate to residential or small commercial properties, any contract that creates unnecessary hurdles in that environment is an albatross around our collective necks. If we are to enjoy the efficiencies that electronic conveyancing will bring to our practices we must first get the contract in order. It is doubtful that large CBD firms who generate telephone book sized contracts for large off the plan apartment sales will adopt this NEW CONTRACT. But for that huge number of conventional transactions that make up the bulk of our work we need a contract that is fair to both parties, easy to explain to our clients and allows us to conduct conveyancing efficiently. The NEW CONTRACT of SALE of LAND will do that.

Moving from the general to the specific, the NEW CONTRACT will improve the process in the following ways:

VENDOR STATEMENT

It takes the logical step of putting the VENDOR STATEMENT before the CONTRACT.

This allows for a front page that the user can adopt to ‘brand’ the document with firm specific details, such as name and logo, to emphasise the role of the firm in preparing the document.

The vendor statement must satisfy the disclosure requirements of s.32 Sale of Land Act but there is room to prepare the Statement in such a way that irrelevant information is deleted.

This is achieved by a Summary Feature that automatically includes the compulsory information and allows for non-applicable options to be deleted. If there is no Owners Corporation or no Notice or GAIC is not applicable then these options are deleted from the form at the outset and those irrelevant parts “collapse” and disappear from the form. This produces a much more user-friendly VENDOR STATEMENT that satisfies all relevant disclosure obligations.

The form also includes some handy commentary about requirements relating to Owners Corporation Certificates and Owner Builder Insurance that will assist in satisfying those requirements, if applicable.

CONTRACT

The preliminary pages satisfy the various ‘notice’ obligations and provide a convenient execution page.

  1. PARTICULARS OF SALE

Allows for the relevant details to be set out in table form.

Reference to Foreign Resident Withholding is noted in ‘payment’ section.

Applicability of GST is addressed. The price is GST inclusive. If the vendor wishes to recover GST then the price must be increased to reflect the vendor’s GST liability.

Reference is made to GST Withholding obligations.

Settlement is to be on a nominated date. If it is an off the plan contract then settlement is to be 14 days after notification of registration and reference to the ‘sunset date’ is included at this point. The default period of 18 months is adopted but may be changed. The important point is that the actual date for registration is available in the PARTICULARS and it is not necessary to wade through interminable Special Conditions to locate the sunset date. The General Condition has been amended accordingly.

Standard provisions for LEASE and LOAN are included and a new provision for BUILDING/PEST REPORT is added.

Whilst reference is made to TERMS CONTRACT there are NO TERMS CONTRACT General Conditions and this rarity must be dealt with in Special Conditions.

  1. GENERAL CONDITIONS

This is where existing practices that cause roadblocks in conveyancing have been identified and, hopefully, improved. The guiding principle has remained EVEN-HANDEDNESS so that the Conditions are, as much as possible, fair to both vendor and purchaser. 28 General Conditions have been retained so as to keep the NEW CONTRACT as close as possible to the familiar standard contract and changes have only been made where improvement was necessary.

  1. WARRANTY

This is where the all-important non-derogation warranty is made by the vendor that the General Conditions comply with the then current copyright form of contract (2018 version at present) and that the General Conditions will prevail over any Special Conditions.

GC.1 to GC.5                     no changes.

GC.6                                     recognises the possibility of electronic settlement.

GC.7                                     introduces an abbreviated electronic settlement Condition.

Existing GC.7 relating to PPSR has been deleted. It is simply not relevant to 99% of standard transactions. The long electronic settlement condition usually added as a Special Condition has been abbreviated and inserted as GC.7.

GC.8                                      requires the vendor to produce builder warranty insurance, if applicable.

GC.9                                      introduces an Off the Plan Condition.

Existing GC.9 relating to General Law land has been deleted. Again, rarely applicable.

The Off the Plan Condition links back to the sunset date specified in the Particulars of Sale (default period of 18 months from contract unless otherwise specified). Also gives EITHER party, not just the purchaser, the right to terminate. This General Condition replaces the pages of Special Conditions that simply repeat the provisions of the Sale of Land Act.

GC.10                                  new obligation on vendor to provide keys at settlement. Settlement to be conducted between 10am and 3pm, rather than 4pm as at present.

GC 11.                                  formatting change.

GC.12                                   stakeholding. Substantial change.

Release of deposit is a huge roadblock in the efficient conduct of a conveyancing file. Unreasonable refusal is an enormous time waster. GC.12 provides that if there is no mortgage or caveat then, provided that loan approval has been obtained, there is no outstanding SPECIAL CONDITION benefiting the purchaser and no valid objection to title within 28 days, the deposit may be released.

If there is a mortgage or caveat, the vendor must provide satisfactory proof that the amount owing does not exceed 70% of the price, allowing for the possibility of FRCGTW, or 80% if the vendor provides a FRCGTW Clearance Certificate.

GC.13                                 GST

Whilst some changes to the wording have been made, the meaning and intent is maintained. The condition has been expanded to take account of the purchaser’s GST Withholding obligation.

GC.14                                    loan approval

The current condition creates unnecessary work for both vendor and purchaser and exposes purchasers to potential loss. Time for approval is extended from 14 days to the more realistic 21 days. This new condition allows for automatic extension of loan approval, subject to the absolute ability of the vendor to end the contract if an extension is requested.

A similar building/pest report condition is added. To avoid disputes, the purchaser must be satisfied with the report(s) or is able to end the contract. The purchaser has an unfettered ability to end the contract and the vendor must accept that the contract is NOT binding on the purchaser until 7 days have elapsed. However, this is a better option than the possibility of arguments about “major structural defects” as often arise now.

GC.15                                   adjustments

The current condition has been adopted with the addition of an obligation on the purchaser to provide copy certificates and provision for Foreign Resident Capital Gains Tax Withholding.

GC.16                                   time

The current condition is adopted, with the extra provision allowing the parties to agree in writing to extend or reduce the time for performance.

GC.17-20                             no change

GC.21                                    notices

Addition to confirm that the vendor is liable for compliance with notices served BEFORE the date of contract.

GC.22                                    lease

A new condition requiring the vendor to provide the purchaser with the original or an acknowledged copy of any lease affecting the property.

GC.23                                   terms contract provisions deleted and replaced with existing GC.24

GC.24                                   abandoned goods

This new Condition passes ownership of abandoned goods to the purchaser.

GC.25                                    default

Perhaps the greatest waste of time in a conveyancing transaction occurs when one or other of the parties default in performance of the contract. Claim and counterclaim occur in a time-poor environment and additional costs are rarely recovered. This default condition allows for interest and limited costs to be claimed at settlement and postpones claims for other losses until after settlement.

GC.26                                    interest – no change

GC.27                                  default notice

A two-tier notice regime calls for a default notice as the first step with 7 days to remedy the default and specified costs of $440 on the notice.

GC.28                                    rescission notice

This follows if the default is not remedied and ends the contract after 10 days. Again, costs on the notice are specified at $440.

Consequences of ending the contract are in conformity with the standard contract.

SUMMARY

The most significant change effected by the NEW CONTRACT is the non-derogation principle whereby the General Conditions prevail over Special Conditions. This will result in a standard contract that will promote efficient conveyancing in the electronic environment.

Substantial improvements to deposit release, loan approval and consequences of default, together with improvements relating to off the plan sales, adjustments, leases and abandoned goods are designed to allow standard conveyancing files to be handled efficiently and cost effectively in the electronic environment.

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