Author: baron + associates

A number of amendments have been proposed to the Environmental Planning and Assessment Act 1979 (NSW) (EPA Act) to improve the current NSW planning system. The legislative updates will aim to ensure that 90% of housing approvals are processed within 40 days for local development for which the council is the planning authority. This will be achieved by encouraging early consultation with neighbours, improving efficiency and transparency of the approval process through a new electronic system on the NSW Planning Portal and preventing the modification of a consent where works have already been carried out.

The Act will be amended to prevent planning authorities and courts from approving a modification where the works have already been completed, except for limited circumstances such as to correct a minor error or miscalculation. Unauthorised works may be subject to enforcement action such as demolition, or require a new building certificate.

Changes to the NSW strata laws will commence on 30 November, 2016 prior to the commencement of the Building Defects Bond Scheme on 1 July, 2017. Significant changes under the Strata Schemes Management Act 2015 and the Strata Schemes Development Act 2015 include:

1. Decisions to renew or terminate a strata scheme will now require only 75% of lot owners to agree. This is intended to allow strata owners to make efficient decisions as the building ages with safeguards included to protect dissenting owners and ensure that ‘just terms compensation’ is offered to lot owners.
2. Buildings with over 50% of registered renters will be able to elect a tenants’ representative to attend meetings of the Owners Corporation, however they will not be able to vote and can be prevented from certain discussions of a sensitive or financial nature.
3. A developer of a strata scheme, or a person connected with the developer cannot be appointed as the managing agent of the strata scheme for 10 years after the registration of the strata plan.
4. Meetings will be more flexible with the Owners Corporation able to elect (by ordinary resolution) to conduct meetings via teleconference and voting may take place electronically.
5. The number of proxy votes that one person may hold will be limited to avoid ‘proxy farming’.

There are approximately a further 90 changes that have been made in an attempt to modernise the existing strata laws.

A new law directed at addressing unfair terms in standard-form contracts where a small business is a signatory has commenced on 12 November, 2016 and applies to contracts between businesses which have been formed, renewed or varied after this date. If a particular term is found to be unfair it will be void and the small business will not be required to comply with the term. The agreement will remain valid to the extent that is possible without the unfair term.

The ACCC has reviewed standard form contracts including those for retail leasing and franchising to identify terms that may be deemed unfair under the new laws. Common problems identified included terms allowing the contract provider to unilaterally vary all terms in an unconstrained manner, an unreasonable ability to cancel or end an agreement and terms imposing broad indemnities or excessive limitations of liability allowing for unreasonable powers to protect against loss or damage at the expense of the small business.

Terms that exceed the measures reasonably necessary to protect a business’s legitimate interests are likely to raise concerns under the new law. For example, a term allowing the landlord to terminate a retail lease for any breach without notice, regardless of the trivial nature which does not include an opportunity for the tenant to remedy the breach would be viewed as concerning to the ACCC.

As of 15 August 2016, real estate agents must record details of certain property reports if they are aware of them or can reasonably find out about them, allowing home buyers to access pre-purchase property inspection reports in an easier and more cost effective manner. Agents are only required to make a once off disclosure at the time when a prospective buyer asks for a copy of the sale contract. There is no obligation to provide the information if no sale contract is requested, or if reports are created subsequent to providing the sale contract.

The reports included under this requirement are:

The new building defect bond scheme will start on 1 July 2017, allowing time for strata buildings to be inspected and for the industry and stakeholders to prepare for the changes. The reform aims to address the concern amongst apartment owners about poor building quality and problems with construction, by increasing accountability of builders and developers, enabling defects to be identified and repaired early and prolonging the life of strata buildings.

The building bond will apply to the construction of strata buildings exceeding three storeys and require a bond of 2% of the final contract price of the building to be lodged by the developer. The bond will be used as security to repair any defective work, which may be identified under the new requirements for defect inspections.

Under the defect inspection requirements, developers must appoint an independent building inspector to prepare an interim report detailing any defects in the building within a strict period of 15-18 months post completion of the works. A final report must be completed within 21-24 months, outlining any unrectified defects previously identified in the interim report, any defects present in rectification works completed since the interim report and the scope of work for rectification of those defects. If there are no defects or they have been rectified, the bond will be returned to the developer.

Further to this, a maintenance schedule prepared by the developer must be tabled in at the first AGM of the new scheme, informing owners of their maintenance obligations.

The Real Property Amendment (Electronic Conveyancing) Act 2015 introduces priority notices for electronic lodgment via the PEXA platform, effective from 1 October 2016. A priority notice notifies interested parties who search the register of a legal or equitable interest in the land and that an instrument or transaction is pending, removing the risk of the gap between settlement and registration.

The priority notice is effective for 60 days. Once the 60 days have passed, if there has been no application for extension, the priority notice will be removed from the title. Purchasers who have entered into a contract for sale of land have a caveatable interest in the land and should therefore consider lodging a caveat rather than a priority notice which has no automatic expiration date.

A priority notice will only be available for electronic lodgment through the PEXA platform, which can be effected at b+a.

Hocking Stuart (Richmond) Pty Ltd has been fined $330,000 in the Federal Court on 6 October 2016, after admitting to misleading and deceiving buyers in relation to 11 residential properties sold in 2014 and 2015 in which property prices were underquoted in the marketing and advertising of the properties.

The Federal Court stated that price was an essential piece of information for prospective buyers, who should be able to rely on correct information to make an informed decision and the price representations made by Hocking Stuart Richmond were intended to create the ‘illusion of a bargain’ which would cause significant inconvenience to many prospective purchasers. Underquoting can cause interested buyers to waste time and money on inspecting properties, obtaining property reports, attending auctions and cause them to miss the opportunity to purchase elsewhere.

The NSW Government has conducted a review into the Residential Tenancies Act 2010 (‘the Act’) as per statutory requirements. The report has recommended that tenants should be able to exit a leasing agreement more easily in cases where they have been a victim of domestic violence from a co-tenant. The review also reviewed the rights and obligations of co-tenants, arguing for clearer terms and protections for occupants of share households under an amended enactment.

The review also recommends that any amendment to the Act will better define the interest paid on bonds, water and utility charges, the way repairs are dealt with and a shift to online submission and databases for rental bonds, tenants, and notices.

An amendment bill will be lodged to parliament in early 2017.

The New South Wales Government has taken steps to phase out paper-based conveyances by 2019. By March 2017, financial institutions will be forced to lodge documents regarding mortgages online via the government’s e-conveyancing software. This will mean that financial institutions will no longer receive paper titles, with certificates being provided in a digital format.

By March the government hopes to have consulted with other interested parties, including realty and legal firms in order to lay down a path to a paperless future. With a 2019 deadline NSW is likely to follow closely in the footsteps of Victorian and Western Australian jurisdiction who already have similar e-conveyancing systems in place.