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|Madam Speaker, I move that the bill be now read a second time.|
For a number of years there have been concerns conveyancing practice in the Northern Territory can operate in a way which fails to ensure prospective buyers are, at the earliest possible opportunity for optimal decision-making, provided with sufficient accurate information about a property they are considering buying.
Lawyers and conveyancers will, generally, advise a buyer if they do not have all the information about a property then they should only sign a contract which gives them an option to rescind the contract should they become aware, as a result of their own searches, of undesirable facts concerning the land or the building which would affect their decision to buy. Unfortunately, if a buyer delays signing a contract whilst they go off and do their own searches, they run the risk of being gazumped; that is, by someone who makes a higher offer for the property and signs a binding contract.
This legislation seeks to address this situation by obliging the sellers of land to make available for inspection by prospective buyers, at the time land is offered for sale, a draft contract of sale, and to disclose other relevant information concerning the property. Failure to disclose will give the buyer a right to rescind a contract, and could constitute an offence on the part of the seller. These obligations will apply in respect of the sale of most land in the Northern Territory. Land excluded, either in the act or the proposed regulations, includes: sales of units off the plan – the land in this context does not yet exist and the relevant acts have their own disclosure requirements; sales of land in a proposed subdivision, because the land in this context does not yet exist; land subject to a Crown lease containing a purpose clause requiring the development of the land; land subject to a development lease from the Land Development Corporation; and here a buyer makes an unsolicited offer to purchase the land.
The bill provides the minimal information to be available by way of disclosure to prospective buyers is: all of the information that can be obtained from the Land Titles Office in respect of the property, including registered encumbrances affecting the land; and details of unregistered leases and tenancy agreements.
The regulations will provide for the disclosure of further information to prospective buyers, including a building status report. In general, this report will, at a minimum, identify any inconsistencies between a building on the land and the approved drawings, and identify any unapproved works. The detail of what is to be contained in this report is still being developed, but that is the general idea. The regulations will also deal with circumstances where the relevant provisions of the Building Act do not apply, as is the case in many areas of the Territory, and some other unique situations where it may not be possible to determine whether existing buildings had to comply with the Building Act or where it is not possible to determine the status of the building.
The regulations will also provide for the qualifications of the persons who may provide a building status report. In addition to building practitioners qualified under the Building Act, the regulations will be drafted so as to permit other persons who have appropriate qualifications and experience, but are not formally qualified as a building certifier or building contractor, to provide a building status report. The intention is to reflect the current situation in the Territory where people with appropriate skills are able to prepare these reports.
As I mentioned, these regulations are still being finalised and officers from the Department of Justice will be working with stakeholders to ensure the wording in the regulations reflects this policy intent. The regulations will also provide an alternative to a building status report being provided. This alternative is a written warning to prospective buyers that the seller has not provided a building status report, with warnings to the buyer of the implications. This warning will be in a form approved by the Chief Executive of the Department of Justice. This option has been included to allow a degree of flexibility, recognising there are situations where a status report may not be required by a prospective buyer, for example, where a building is clearly to be demolished, or where the only building on land is a dilapidated old shed. There may be other situations where a building status report is not able to be obtained, for a variety reasons, by a seller. Examples include stringent time constraints or perhaps financial hardship. At the very least, in these situations the prospective buyer will be informed as to the possible consequences of not having the status report.
The regulations will also require that the seller provide copies of documents such as compliance certificates under the Swimming Pool Safety Act and rate notices, and information about key decisions made by a body corporate under the Unit Titles Act or the Unit Title Schemes Act. The regulations will also require sellers to disclose any personal knowledge they may have regarding matters that may affect the land. This includes matters such as drug premises orders, flooding, storm tides and seepage.
This bill also provides for a mandatory cooling off period of four days for sales of residential land. In essence, a buyer can change their mind in those four days and rescind the contract without suffering any penalty. However, the buyer can waive or reduce the cooling off period if they obtain appropriate advice from a legal practitioner or a licensed conveyancing agent. However, there is no cooling off for purchase at an auction or for purchases by unsuccessful bidders within two days of an unsuccessful auction.
The bill provides for a transitional period during which the new arrangements will not apply to property listed for sale or to contracts made prior to the commencement of the legislation.
This legislation is not intended to be for the purposes of the enforcement of the Building Act or other regulatory legislation. An owner of land has a right to sell land, even though a building may not comply with the relevant provisions of the Building Act or other legislation. Rather, the objective of this legislation is to improve the efficiency and the fairness of the conveyancing process for all concerned by ensuring, as far as practicable, the buyer has the same information as the seller at the earliest opportunity.
In a more perfect world, it would be useful for there to be authorative records about buildings, including regulatory compliance, and this could be disclosed when land is being sold. However, this information does not currently exist and so, to a certain extent, this bill has to leave to the parties the decision about what other level of information is obtained regarding the building.
I note that vendor disclosure legislation, in one form or another, has been in place in Victoria, South Australia and New South Wales for many years. Similar legislation has been enacted in more recent years in the Australian Capital Territory. My understanding is that, in those jurisdictions, it is accepted that the legislation does work to achieve its objectives.
Before I conclude, I would like to mention that there has been some discussion about the practice of gazumping in the Territory. The mechanism set out in this bill is designed to give prospective buyers of property the opportunity to make a considered assessment of the property as soon as it is put on the market. This will mean that buyers are not left having to make an interim arrangement, such as entering in to a non-binding agreement to purchase before they go off and do all the prudent searches for information, which leaves them open to another prospective buyer coming forward with a higher offer. This scheme will minimise the opportunity for this sort of practice to occur by providing that draft contracts of sale are prepared and available before a property can be made available for sale, and by giving buyers the minimum knowledge they might require to make a decision to enter into a binding contract of sale.
I would like to pass my sincere thanks to the various stakeholders for their input in to the development of this bill and the regulations. A number of legal practitioners, real estate agents and other key stakeholders have spent many hours assisting the Department of Justice to refine the bill and the regulations to the stage where we believe we have a practical and workable solution to a problem that has been something of a thorn in the side for buyers of land in the Northern Territory for a number of years.
As a final note, I would like to advise that, before this legislation commences, departmental officers will visit each of the major centres, providing seminars on how the legislation will operate. The department will also work with stakeholders to prepare information material for the benefit of buyers and sellers.
I commend the bill to honourable members and I table a copy of the explanatory statement.
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