We are now able to settle property transactions on PEXA, Australia’s property online exchange. Whether your next sale or purchase can be on PEXA will depend on whether your lender is a participant and whether the solicitor or conveyancer acting for the other party is on PEXA. If your sale or purchase is going to be on PEXA we need to do a 100 point identity check before proceeding.
See this link https://www.pexa.com.au/financial-institutions for the list of participating banks.
See this link https://www.pexa.com.au/pexa-directory for a list of participating conveyancers and lawyers (called subscribers in PEXA.)
Purpose and timing: Amendments to the Property Stock and Business Agents Act 2002 (the Act) take effect on 1 January 2016.
The amendments are designed to “beef up” the existing provisions against underquoting.
Although the amendments commence on 1 January 2016, some provisions will apply to existing agency agreements– see below.
Only Residential Property affected: The amendments to the Act only affect the sale of “residential property” as defined in Part 4 Division 8 of the Conveyancing Act.
This is the same definition of “residential property” which is relevant to the “cooling off” provisions. In other words, the amendments do not apply to the sale of properties over 2.5 hectares.
Agency Agreements: Section 72A deals with agency agreements, including auction agency agreements, entered into from 1 January 2016:
- Agency agreements must now include the agent’s estimate of the likely selling price. This is referred to as the estimated selling price.
- The estimated selling price may be expressed as a price range, but the range cannot be greater than 10%. For example, “$800,000 – $880,000” is permissible but “$800,000 – $900,000” is not.
- The estimated selling price must be and remain a reasonable estimate of the likely selling price. This means the agent must have regard to sales evidence in making an estimate.
- If the estimated selling price ceases to be a reasonable estimate due to new sales evidence, the agent must revise the estimated selling price by:
- notifying the other party to the agency agreement, in writing, of the revised estimated selling price, and
- amending the agency agreement accordingly.
- When specifying or revising an estimated selling price, the agent must provide the seller with evidence of the reasonableness of the estimated selling price.
Advertising: Section 73 deals with advertising:
- Advertisements for sale of residential property must not indicate a selling price below the estimated selling price.
- Advertisements for sale of a residential property must not include the phrase “offers above” or “offers over” a specified selling price or price range (or any similar words or symbols).
- If the agent revises the estimated selling price, the agent must take all reasonable steps to amend or retract any advertisement with a selling price below the revised estimated selling price.
Representations: Section 73A deals with representations by agents or agency employees:
- An agent or employee must not represent to a prospective buyer that the property is likely to be sold for less than the estimated selling price. This includes oral and written statements.
- If an agent or employee makes such a representation, a court can order the entire commission or sale fee to be paid to the Property Services Compensation Fund.
Record keeping obligations: Section 73B deals with keeping records of statements about price:
- If an agent or an agency employee makes a statement to a prospective buyer or seller that a property is likely to be sold for a specified price or within a specified price range, the agent must make a written record of the statement.
- The record of the statement must:
- contain the address of the property, the price or price range, the date and time of the representation and any other information prescribed by the regulations (no other information is yet prescribed); and
- be kept at the agent’s principal place of business for at least 3 years.
Retrospective application – existing agency agreements
- Sections 73 (Advertising) and 73A (Representations) apply to existing agency agreements, ie agency agreements entered into before 1 January 2016.
- An estimate of the likely selling price or price range specified in an existing agency agreement is taken to be the estimated selling price for the purposes of sections 73 and 73A. (The new legislation does not deal with the possibility that there is no estimate in an existing agreement.)
- An agent may revise an estimate in an existing agreement that is taken to be an estimated selling price. (On the face of it, the expression “may” instead of “must” is problematic here, because it implies the agent has a discretion whether or not to revise. Any such discretion would be contrary to the spirit of the amendments, so a court might instead construe this as a mandatory requirement. Accordingly we consider the prudent approach is to revise any existing agreements where the agent becomes aware of evidence that suggests the estimate in the agreement is no longer a reasonable estimate.)
Offences and Penalties: An agent who fails to comply with sections 72A, 73, 73A or 73B is guilty of an offence and can be liable to a fine of up to $22,000. However an agent will not be guilty of an offence merely because:
- the estimated selling price in an agency agreement is expressed as a range and the range exceeds 10%; or
- the agent makes a written record of a statement about price but fails to comply strictly with all of the record keeping requirements.
Buying off the plan is tricky because you can’t see, touch or feel what you are buying. Here are some tips to get you started:
- understand that changes to the development of the balance of the scheme or land near the proposed development may occur and your contractual remedies if you don’t like these may be limited.
- understand the timing and the developer’s rights to extend the time for completion – usually there is a sunset date by which the development must be completed and your purchase must be finalised but there are also usually rights for the vendor to extend that date in certain circumstances – make sure you understand these and they fit with your plans.
- discuss with your lawyer the circumstances where you would not want to go through with the purchase and either make sure they are covered in your rescission rights in the contract or don’t proceed – each buyer will have different ‘deal breakers’.
- understand the structure of the scheme:
- how is the strata building structured?
- is there one strata scheme for the whole building or is it a stratum subdivision?
- often where there will be residential apartments in the upper levels and commercial or retail space in the lower and ground floor levels a separate strata scheme is established for the residential part and for the commercial and retail part.
- this sort of ‘mixed structure’ impacts on your ability as an owner of a residential apartment to control what happens in the commercial/retail part.
- if it is a mixed structure there should be a Building Management Statement in place which sets out how the two strata schemes co-exist.
- have a look at other developments the developer has completed. Do you like them? Do the finishes look of good quality?
- get a copy of the full development consent for the scheme you are buying into and read it and have your lawyer read it.