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Sale of Land Act Reforms affecting Contracts of Sale of Real Estate

The Consumer Affairs Legislation Amendment (Reform) Act 2010 (Vic) ("Reform Act") amends the Sale of Land Act 1962 (Vic) ("Act") by modifying the statutory requirements for contracts of sale of real estate in Victoria.

The Reform Act received royal assent on 28 September 2010 and was due to come into force on 1 September 2011, unless proclaimed earlier. After several delays, two important changes to the Act came into operation on 1 March 2012, with the remaining changes coming into force on 1 December 2012. 

Change to Treatment of Deposit

The first change to the Act is to the treatment of deposits under off the plan contracts of sale. On 1 March 2012, section 9AA(2) of the Act was amended to provide that a deposit paid under an off the plan contract of sale can no longer be held in the joint names of the parties in a special purpose trust account. Deposits can only be paid to and held by the legal practitioner, conveyancer or licensed estate agent acting for the vendor. This requirement does not restrict the parties from agreeing to the vendor's legal practitioner, conveyancer or licenced estate agent from investing the deposit in an interest bearing trust account, as the deposit moneys are still under the control of the vendor's legal practitioner, conveyancer or licenced estate agent.

A failure to comply with section 9AA of the Act gives the purchaser the right to rescind the contract.

Change to Cooling off Provision

The second change to the Act amends section 31(5)(e) of the Act. From 1 March 2012, a purchaser who obtains independent legal advice in relation to the purchase prior to entering into a contract, will no longer be prevented from exercising their right to cool off within 3 clear business days of the day that they signed the contract. The other exceptions to the 3 day cooling off period will continue to apply. e.g. If the property was purchased at or within 3 clear business days before or after a publicly advertised auction or the property purchased is used mainly for industrial or commercial purposes.

A failure to strictly comply with section 31 of the Act, could give the purchaser the right to avoid the contract.

Change to Notice to Purchasers

From 1 December 2012 all off the plan contracts of sale must include 3 notices to the purchasers. Originally the Reform Act required the notices to be on the front cover of the contract. This requirement was amended by the Residential Tenancies and Other Consumer Act Amendment Act 2012 (Vic) ("RTOCAA Act"), which provides that the 3 notices must be 'conspicuous'. 

The notices are as follows:

Notice to Purchaser
Section 9AA(1) of the Sale of Land Act 1962
    • Subject to the limit set by section 9AA(1)(b) of the Sale of Land Act 1962 (Vic), the purchaser may negotiate with the vendor about the amount of deposit moneys payable under this contract.
    • A substantial period of time may elapse between the day on which the purchaser signs the contract for sale and the day on which the purchaser becomes the registered proprietor of the lot.
    • The value of the lot may change between the day on which the purchaser signs the contract for sale of that lot and the day on which the purchaser becomes the registered proprietor.

There is no definition of 'conspicuous' in the RTOCAA Act, so its ordinary meaning should be applied. To this end, the notice should be in a font size that is at least comparable with the rest of the contract and in a position where the purchaser is likely to see them.

If the notices under section 9AA(1A) of the Act are not given or are not conspicuous, the purchaser will not have a right to rescind the contract, but the vendor will be in contravention of the Act and will be liable for a penalty.

What do these amendments to the Act mean?

Effective from 1 March 2012:
  • all off the plan contracts must be updated to remove any conditions allowing the holding of deposits in special purpose trust accounts; and
  • all contracts of sale must be updated to contain the correct cooling off notice.
Effective from 1 December 2012:
  • all off the plan contracts of sale that do not contain the 3 notices and are not entered into on or before 1 December 2012, will need to be updated to include the new warning notice in a conspicuous location in the contract.

Published January 2013


For further advice or assistance

Contact Jamie McCallum on 5337 0253 or jmccallum@nevetts.com.au


The information in this publication or on this website is of a general nature only. It is not, nor is it intended to be, legal advice. You should consult a lawyer for individual advice about your particular circumstances.
The information on this website is of a general nature only. It is not, nor is it intended to be, legal advice. You should consult a lawyer for individual advice about your particular circumstances. Nevett Ford do not warrant that information contained in links to third party sites are correct and accept no responsibility for the accuracy and reliability or any other matter in relation to a third party site.