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12 March 1991 - Current

 
SALE OF LAND AMENDMENT BILL 2014
Page 241
6 February 2014
ASSEMBLY Statement of Compatibility VICTORIA
                        SALE OF LAND AMENDMENT BILL 2014
                           Statement of compatibility
Ms  VICTORIA  (Minister for Consumer  Affairs)  tabled  following  statement  in
accordance with Charter of Human Rights and Responsibilities Act 2006:
  In   accordance  with  section  28   of  the  Charter  of   Human  Rights  and
  Responsibilities  Act  2006, (the 'charter  act'),  I make  this  statement of
  compatibility with respect to the Sale of Land Amendment Bill 2014.
  In my opinion, the  Sale of  Land Amendment  Bill 2014,  as introduced  to the
  Legislative Assembly,  is  compatible  with human  rights  as set out  in  the
  charter act. I base my opinion on the reasons outlined in this statement.

  Human rights issues
  Human rights protected by the charter act that are relevant to the bill
  Property (section 20)
  Section 20  of the charter act provides  that a person must not be deprived of
  his or her property other than in accordance with law.
  Part 2 of the bill requires vendors  of  land  to disclose certain information
  about the land  to prospective purchasers  before entering into a  contract to
  sell  the  land,  and  enables  a  purchaser  to rescind a contract in certain
  circumstances.

  A purchaser may not rescind a contract where  a vendor  has acted honestly and
  reasonably and ought fairly to be excused for a failure  to  disclose required
  information, and where the purchaser is substantially in as good a position as
  if all the required disclosure had taken place.
  These provisions of the bill are relevant to property rights under section  20
  of the charter act as they restrict a person's capacity to dispose of property
  unless  certain  disclosures have  been  made, and give  a  purchaser under  a
  contract of sale rescission rights, in certain circumstances.
  However,  these provisions  are  not unreasonable  or  arbitrary, as they  are
  intended to address information imbalances  between  vendors and purchasers in
  property  transactions,  and  provide an avenue of  redress  in  circumstances
  where, for example, required disclosures have not been made.

  Accordingly,  property  rights  under  section  20  are  not  limited  as  any
  interference  with property rights  under the bill is neither unreasonable nor
  arbitrary and is in accordance with law.
   Hon. Heidi Victoria, MP
  Minister for Consumer Affairs

SALE OF LAND AMENDMENT BILL 2014

Second reading

Ms VICTORIA (Minister for Consumer Affairs) -- I move: That this bill be now read a second time. Speech as follows incorporated into Hansard in accordance with resolution of house: The bill will amend the Sale of Land Act 1962 to reform and modernise Victoria's system of vendor disclosure, and make related and consequential amendments to the Owners Corporations Act 2006. The requirements of section 32 of the Sale of Land Act will be re-enacted with improvements to increase efficiencies in the preparation of section 32 statements, improve the readability of section 32 statements, and bring greater clarity to, and refinement of, existing disclosure requirements. Redundant and outdated provisions in the legislation will not be re-enacted. The amendments introduced by this bill will assist the government to meet its commitment to achieve significant red tape reductions of 25 per cent by July 2014 by reducing the
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administrative compliance requirements associated with the preparation of section 32 statements. Section 32 of the Sale of Land Act requires vendors selling land in Victoria to disclose certain information about the land for sale to prospective purchasers, through the provision of a section 32 statement. The original policy rationale for section 32 was to improve the position of purchasers by increasing the amount of information available to assist them in the bargaining process. Requiring the vendor to disclose certain information to the purchaser before the purchaser signs the contract of sale acknowledges the potential for an information imbalance between the vendor and the purchaser, to the detriment of the purchaser. While prospective purchasers can gather a great deal of relevant information themselves by undertaking physical inspections of a property, such inspections may not necessarily yield all the information they may need to determine whether they are paying a fair price or, fundamentally, if the property is the right one for their needs. Lawyers and conveyancers, on behalf of their vendor and purchaser clients, are generally responsible for preparing and reviewing section 32 statements. These professionals, along with the estate agents who sell properties, have worked together to build a mature and successful vendor disclosure system in Victoria. However, in the 30 years since its introduction, section 32 has been amended many times, increasing the level of disclosure, as well as the complexity and size of section 32 statements. As a result, the government conducted a red tape reduction review of section 32 to seek stakeholder views on potential areas for reform, principally to alleviate the administrative burden on vendors and purchasers and the lawyers and conveyancers who act for them. During consultation on these reforms, stakeholder bodies representing lawyers, conveyancers, estate agents and owners corporations managers highlighted a number of areas for potential reform, and many of these stakeholder-initiated proposals are included in this bill. The amendments to be made by the bill are estimated to deliver red tape reduction savings by clarifying and simplifying the information that must be disclosed, updating key aspects to reflect modern conveyancing practices, reducing the size and number of statements required, and removing requirements that impose unnecessary delays in preparing section 32 statements. However, it is important to note that the amendments will not diminish necessary protections for purchasers. The review confirmed the value of section 32 statements, but highlighted the need to refocus its content to information specific to the property for sale, and held by the vendor or obtainable from a third party. I will turn now to the detail of the proposed bill. The bill re-enacts the provisions of section 32 as division 2 of part II of the Sale of Land Act, thereby giving vendor disclosure the proper status it should accord in Victoria's sale of land regime. Key features of the existing regime that provide protection to purchasers have been re-enacted. In particular, the requirement to provide the section 32 statement to a purchaser prior to a contract of sale being signed has been re-enacted, as have existing rights of rescission that may be relied upon by the purchaser in certain circumstances. Many of the provisions have been re-enacted without amendment, where stakeholders advised that the current level of disclosure is appropriate. I will not focus further on these unchanged aspects of vendor disclosure, except to say that this bill has provided a welcome opportunity to re-enact provisions of section 32 in a modern drafting style, for example by grouping re-enacted requirements under key themes, to improve readability and comprehensibility. Where necessary, provisions have been re-enacted with amendments to improve clarity, codify existing industry practices and remove unnecessary red tape. Feedback from stakeholders about current conveyancing practices are reflected in the bill, which consolidates all disclosure requirements into one statement and removes the requirement for a second section 32 statement and accompanying certificates and documents to be annexed to the contract of sale. The bill re-enacts existing requirements to attach evidence of the vendor's title to the land for sale to the section 32 statement, but has codified common practice in relation to land under the Transfer of Land Act 1958 by requiring a copy of the register search statement to be attached to the section 32 statement. This requirement replaces the current requirement to attach a copy of the certificate of title. Existing requirements to provide copies of plans for proposed subdivisions and amendments to subdivided land have also been re-enacted with amendments to remove outdated language and clarify the extent of disclosure required. The bill simplifies and clarifies planning disclosure requirements, ensuring that section 32 requirements keep pace with Victoria's current planning system. The bill tightens disclosure requirements for -- among other things -- government notices, orders and approved proposals affecting the land. Vendors will now only need to disclose those documents that have a present-day application to the land. They will not be expected to disclose historical documents that may have once applied over the property, but which do not have any continuing impact on the land. The bill will also specifically clarify the requirements for disclosure of land contaminated by agricultural chemicals or affected by livestock disease. The bill introduces a new separate requirement for vendors (or their estate agent should they engage one) to make a due diligence checklist available to purchasers when a property is first offered for sale if the land includes a residence or is land on which a residence could be constructed. Its introduction acknowledges and responds to stakeholder feedback that when purchasers commence looking at properties, generic information can assist purchasers in making their own enquiries to find out more information in areas of particular interest to them.
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The due diligence checklist will be prepared by Consumer Affairs Victoria and made available on its website, with direct links to other websites with specialist content. It is anticipated that estate agents will make hard copies of the due diligence checklist available to potential purchasers at open for inspection events, and will provide links from their websites to the website of Consumer Affairs Victoria, where it will be available. The bill also makes amendments in relation to the disclosure of information about owners corporations at the point of sale. Firstly, the bill increases flexibility for vendors in satisfying owners corporation disclosure requirements by allowing vendors to choose to either specify the required information in the section 32 statement, or provide a copy of the current owners corporation certificate. This will replace the current requirement for an owners corporation certificate to be provided by a vendor whenever land is sold that is affected by an owners corporation, and is anticipated to deliver savings to vendors who take an active interest in their owners corporation and have the relevant information in their possession. Vendors who do not hold all the relevant information will still need to obtain an owners corporation certificate to satisfy their disclosure requirements. As it is important that there is no capacity for a purchaser to mistakenly believe that they are buying into an active and functioning owners corporation when in fact the opposite is true, the bill also makes it clear that the vendor will be expected to disclose in the section 32 statement when an owners corporation is inactive. Secondly, the bill makes consequential and related amendments to the Owners Corporations Act, to enable a separate review of fees for owners corporation certificates to be undertaken. A concern raised during the review was the current inflexibility of the prescribed fee for owners corporation certificates. The Owners Corporations Act only provides for one fee, with no capacity for the fee to be varied for certificates of different sizes, complexity or urgency. As a result, it is proposed to reassess owners corporation certificate fees to allow the current costs to be examined and differential fees developed. To facilitate this, the bill amends the Owners Corporations Act to improve its fee-making powers. The bill also makes it an offence for an owners corporation to charge more than the relevant prescribed fee for issuing an owners corporation certificate. In concluding my remarks on this bill, I wish to acknowledge that stakeholders made very worthy contributions to the review of section 32 and, as a result, influenced the development of this bill. The amendments introduced by this bill aim to ensure that section 32 statements continue to hold pride of place as a major source of protection for purchasers of land in Victoria. I commend the bill to the house. Debate adjourned on motion of Ms GREEN (Yan Yean). Debate adjourned until Thursday, 20 February. Remaining business postponed on motion of Ms ASHER (Minister for Innovation, Services and Small Business).