The Real Estate Institute of Western Australia (“REIWA”), in conjunction with the Law Society of Western Australia, recently released the 2018 Joint Form General Conditions for the Sale of Land (“2018 JFGC”) which replaces the former 2011 version.
The 2018 JFGC aims to adapt to the evolving legal landscape within Western Australia taking into consideration new legislation and changes to common law.
Below is a short summary of the recent changes to the 2018 JFGC. For the avoidance of doubt, defined terms used throughout this document have the meaning given in the 2018 JFGC.
Notable amendments to the 2018 JFGC include the following:
- all relevant notices can be served electronically by email (clause 21.4(a)(3));
- matters relevant to chattels covered under the Personal Property Securities Register have been included (clause 2.8);
- the Foreign Resident Withholding Regime has been incorporated for those contracts involving foreign nationals as a party or parties (clause 3.7);
- Electronic Conveyancing provisions have been included (clause 3.12);
- certain provisions regarding final inspections have been changed (clause 5.1(b));
- the application of the Seller representation and warranty provisions has been revised (clause 9.3); and
- subdivision requirements have been changed (clause 13.9).
Foreign Resident Withholding Regime
The 2018 JFGC now incorporates the provisions that were previously in REIWA Annexure 190.
The new provisions in clause 3.7 of the 2028 JFGC clarify that if the market value of the Property meets the Threshold Amount (currently $750,000) or more and the Seller does not provide a Clearance Certificate then the Buyer must deduct the Withholding Amount (currently 12.5%) and pay that amount to the Australian Taxation Office.
The 2018 JFGC now incorporates the provisions that were previously included within REIWA Annexure 187.
The updated provisions in clause 3.12 of the 2018 JFGC provide that Electronic Settlement pursuant to the electronic conveyancing system known as PEXA will apply:
(a) when it is a Landgate requirement to do so; or
(b) if the Contract specifies there will be an Electronic Settlement; or
(c) if the parties nonetheless agree to an Electronic Settlement.
Whilst the transition to Electronic Settlements via PEXA is well underway within Western Australia, the Landgate requirement is scheduled to take effect, as a mandatory requirement, on 1 December 2018.
The new provision in clause 3.12 of the 2018 JFGC sets out matters relating to setting up the Workspace, electronic correspondence, withdrawal from Electronic Settlement, payment, tracing mistaken payments and delayed Settlements.
It should be noted that notwithstanding the new provision for Electronic Settlement, the 2018 JFGC still provides for the existing ‘paper’ settlements in situations where the parties agree not to use Electronic Settlement and it is not a requirement imposed by Landgate.
Clause 5.1(a) of the 2018 JFGC clarifies that the purpose of the inspection of the Property by the Buyer prior to Settlement or Possession is to check that the Seller has complied with the Seller’s obligations under the Contract, and access is granted for that specific purpose. The clause now provides that the Buyer and Seller should endeavour to agree to the timing of the initial inspection within five business days prior to Settlement or Possession.
In circumstances where the Buyer has identified items within the Property that require rectification by the Seller under the Contract, clause 5.1(b) now provides for the Buyer’s right to one further inspection prior to Settlement or Possession. By way of example, if the carpets were in a clean condition at the Contract Date but at the initial inspection the carpets were dirty and stained rather than clean, then the Buyer would be entitled to a second inspection to confirm that the carpets were in the condition as they were in at Contract Date (i.e. clean).
It should be noted that this is not an opportunity for the Buyer to conduct another full inspection of the Property but rather to determine if the initial problem identified in the initial inspection has been resolved prior to Settlement or Possession.
Seller Representation & Warranty
Clause 9.3 of the 2018 JFGC is a new provision that has been added to address the situation where after the Contract Date but before Settlement or Possession, events transpire such that a warranty or representation made by a Seller would no longer be true as at the Settlement Date or Possession Date.
If this occurs, then unless the parties otherwise agree, the Buyer will have no right to terminate the Contract, delay Settlement or withhold any part of the Purchase Price unless the event:
(a) unreasonably affects the proposed use of the Property by the Buyer; or
(b) materially affects the value of the Property.
The aim of clause 9.3 is to provide direction to settlement agents and solicitors in dealing with parties who, for instance, advise that they will not settle under the Contract unless a certain item is fixed or a task is undertaken by the Seller prior to Settlement or Possession. This clause has been included to give express written clarity to the position at common law.
The amendments to clause 13 now incorporate the recent changes to section 13 of the Sale of Land Act 1970 (WA) where the Seller of a subdivision of land or a strata lot is not the registered proprietor of the land when entering into the Contract with the Buyer on the Contract Date, known as a “Future Lot Contract”.
In respect of Future Lot Contracts, the Seller must comply with the provisions in the Sale of Land Act 1970 (WA) by providing the required statutory warning notices, using reasonable endeavours to obtain approvals, lodging plans and providing the Buyer with relevant information in relation to the land.
Given the widespread use of email correspondence in today’s day, clause 21.4 of the 2018 JFGC has been amended to provide for the service of Notices by email.
Pursuant to the new provisions in clause 21.4, Notice sent by email is deemed to be served on the other party when it is sent unless a return email is received to the effect that the email was unsuccessful. If the email is sent after 5pm or is sent on a day that is not a Business Day then it is deemed to have been served on the following Business Day.
Please contact Zafra Legal on 08 6212 3777 should you require any advice or assistance in relation to the 2018 JFGC.