Buying or selling property? Here’s what’s changed in the Sale and Purchase Agreement

If you’re thinking about buying or selling property, you’ll probably come across the Law Association version of the Agreement for Sale and Purchase of Real Estate (Agreement). It’s a familiar-looking document for many, but it’s also an important legal contract, and some recent changes are worth knowing about before you sign.

The updated Eleventh Edition 2022 (4) includes a number of changes designed to clarify the parties’ obligations and reflect current property practice. Some are technical, but others could have a real impact on purchasers and vendors.

Here are some of the key changes we think you should know about.

Finance conditions: purchasers may need to show the steps they’ve taken

The standard finance condition has been updated.

If a purchaser cannot arrange finance and wants to cancel the Agreement under the finance condition, the vendor can now ask the purchaser to provide a reasonable explanation of the steps taken to arrange finance, together with supporting evidence.

In practical terms, purchasers should make genuine efforts to arrange their finance and keep a record of those efforts.

It’s also a helpful reminder that a finance condition isn’t simply a way out of an Agreement if you change your mind about buying the property. If you need the purchase to be conditional on finance to allow you to finalise the necessary arrangements, it’s important to make sure the condition gives you the protection you need from the outset.

Making changes to the Agreement clearer

Another useful change is aimed at making amendments to the general terms in the Agreement easier to spot.

The updated Agreement contains a new warranty that the published wording hasn’t simply been altered, removed or added to by a party, their lawyer or their agent. Changes can still be made, of course, but deletions should be shown by striking through the original text and additions should be made in a way that leaves the standard wording visible and the amendment reasonably identifiable.

That might sound like a small change, but it provides useful transparency. When you’re reviewing an Agreement, you should be able to see what has been changed from the general terms before deciding whether you’re comfortable signing it.

Selling a property where building work has been carried out?

Vendors should take particular note of a new warranty relating to restricted building work.

The Agreement already includes warranties about building and other work carried out or permitted by the vendor. The updated version goes further. Where restricted building work has been undertaken on or after 13 March 2012, the vendor warrants that the work was carried out or supervised by a suitably qualified person. Restricted building work is a term defined by statute and includes alteration or construction of both the primary structure of a house and the external moisture-management system of a house.

This makes it even more important to think about your property’s history before putting pen to paper.

If there is any uncertainty about whether work required consent, whether restricted building work was involved, or who completed it, it is worth checking before signing an Agreement and potentially giving a warranty that you cannot comfortably make.

Buying or selling a unit title property?

There’s also an important change for apartments and other unit title properties.

Vendors already give various warranties relating to the body corporate. Under the updated Agreement, a vendor must not, between signing and settlement, vote on a matter that would alter certain body corporate warranties without the purchaser’s written consent.

This gives purchasers some additional protection during the sometimes lengthy period between signing an Agreement and taking ownership.

For anyone buying a unit title property, however, the Agreement is only one part of the picture. Reviewing the body corporate records, disclosure statements, financial information, meeting minutes and long-term maintenance plan remains an important part of understanding exactly what you’re buying into.

Title issues: a little more flexibility

The provisions dealing with objections or requisitions to a property’s title have also been clarified.

If a purchaser raises a valid objection or requisition and the vendor says they cannot or will not address it, the purchaser has certain rights to cancel. The updated wording also expressly confirms that the purchaser may waive the objection or requisition at any time before the Agreement has been cancelled.

That provides greater flexibility where a title issue is identified but, after receiving advice, the purchaser decides they are comfortable proceeding.

A few other changes worth knowing about

There are a number of smaller updates throughout the Agreement too. These include:

• increasing the deemed delivery period for notices sent by ordinary post from three to five working days;
• changes to the Overseas Investment Act consent provisions;
• modernised descriptions for some of the standard chattels;
• a new pet bond field for residential tenancies;
• updates to GST information; and
• changes to the way information about completed property sales may be collected and used.

So, what does this mean for you?

The key takeaway is simple: just because it’s a “standard” Agreement doesn’t mean every property transaction is “standard”.

Every property is different, and so are the people buying and selling it. The conditions and additional clauses you need will depend on the property, your circumstances and the risks you need to manage.

Signing an Agreement is a significant step, and for a lot of people, buying a home is the biggest financial commitment they will ever make. That’s why having us take a look before you sign can make all the difference. It gives us the opportunity to identify any concerns, recommend appropriate conditions and make sure you understand exactly what you’re agreeing to.

Thinking of buying or selling? Get in touch with the property team at DTI Lawyers before you sign. We’re happy to talk you through the Agreement, answer your questions and help make the process as straightforward as possible.