Task 1 - Activity 1
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The University of Sydney *
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PROPERTY
Subject
Law
Date
Jan 9, 2024
Type
docx
Pages
6
Uploaded by JudgeKnowledgeMouse17
08 December 2023
Dear Mr and Mrs Clark,
Re: Purchase of Property at 16 Junction Street, Summer Hill NSW 2130
This letter of advice includes our advice on several significant issues about the proposed sale
agreement and any supporting documentation for the Property below.
1.
Compliance with vendor disclosure obligations
Section 52A(2)(a) of the Conveyancing Act 1919 (NSW) stipulates that the vendor attach certain
prescribed documents, and the vendor has not fully complied with the disclosure obligations
possible.
The following documents were provided by the vendor in compliance with his obligations:
1.
S 10.7(2) planning certificate under Environmental Planning and Assessment Act 1979
2.
Sewerage infrastructure location diagram
3.
Property certificate for the land
4.
A copy of a plan for the land
5.
Clearance certificate
6.
Land Tax Certificate - at least 14 days before completion of the contract or on the date the
contract is made, depending on what the parties agree regarding the completion date.
The following document was NOT provided by the vendor in compliance with his obligations:
1. A copy of any instrument lodged or registered at NSWLRS that creates or purports to create an
easement, profit à prendre, restriction on use or positive covenant burdening or benefiting the land
Comment:
The property certificate shows that the property has an easement:
Covenant and cross easements
(s181B Conveyancing Act 1919) affecting party wall shown on the common boundary of lots B and A
in DP412537. Thus, the instrument lodged at NSWLRS creating this easement must be provided to
the purchaser.
Furthermore, the vendor also supplied a survey report, which states that behind the cottage erected
in the land is a brick WC and in the backyard is a brick garden shed that encroaches over the
boundary by 0.36 metres. The local council may issue a demolition order due to the potential
violation of the WC and the encroachment. Given this, it would be wise to acquire a building
certificate to shield yourself from any authority or individual requiring that the building be repaired,
demolished, altered, expanded, or rebuilt, as well as from pursuing civil litigation regarding the
encroachment.
I strongly encourage you to ask the owner for a copy of the certificate or to get her permission to
apply for it. Please note that as per section 6.22 of the
Environmental Planning and Assessment Act
1979 (NSW), you cannot apply for a building information certificate unless the owner grants
permission, as you are not yet the purchaser under the contract.
0.
Vendor’s title to property
The land's registered proprietor, Mary Nguyen, is confirmed to be the vendor by the title certificate.
In doing so, the vendor's legal right to sell the property is guaranteed.
0.
Property identification
Regarding the property identification, the data in the draft contract, the title search, the deposited
plan, and the survey report are all consistent with one another and with your instructions to
purchase a residential property. Nevertheless, I have noticed that neither the Deposited Plan nor the
contract's list of improvements include the brick WC and brick shed that can be seen in the survey
report. While this doesn't change the property's residential character, there could be issues because
these constructions might be illegal.
0.
Key conditions of the Standard Contract
All contracts for the sale of land must include warnings required by the
Conveyancing (Sale of Land)
Regulation 2017
(NSW). The following clauses are the contract's main terms. It is critical that you
fully comprehend these terms because they define your rights and responsibilities under the
contract.
●
Clause 2 - Deposit
Deposit payment: The deposit is 10% of the purchase price and must be made to the deposit holder
at the time the contract is signed. The deposit can be paid in cash (up to $2,000), by cheque or by
electronic funds transfer.
In the event of a purchaser's default, the vendor has the right to terminate the contract and keep
the deposit (clause 9).
●
Clause 6 - Error and misdescription
This clause gives the purchaser the right to compensation for any errors or misdescriptions in the
contract before it is completed, regardless of how big the mistake was or whether the purchaser saw
it coming or relied on it. This does not, however, apply if the purchaser is already aware of the actual
nature of the inaccurate or misleading information.
●
Clause 7 - Claims
Before completion, the purchaser may make claims, including those under Clause 6, by serving them
with a statement of the amount claimed. This means that the purchaser must formally notify the
vendor of the problem and specify how much they believe they are owed or should be compensated
for. The vendor can terminate the agreement if the purchaser's claim (apart from claims for delays)
is greater than 5% of the property's purchase price. This is contingent upon the purchaser failing to
waive these claims within 14 days of receiving a notice from the vendor rescinding the agreement.
Both parties must carry out the remaining terms of the agreement if the vendor decides not to
cancel it. Following completion, the deposit holder will retain 10% of the property price or the entire
amount claimed from the sale price until the claims are settled and the retained sum must be
invested under Clause 2.9. An arbitrator, appointed by the President of the Law Society if none of
the parties can agree on a mutual arbitrator, will have to decide the claims. The Law Society-
approved Conveyancing Arbitration Rules must be adhered to during the arbitration.
The purchaser is only entitled to the lesser of the total amount claimed or the costs incurred in
connection with these claims. If the parties do not appoint or request an arbitrator within three
months of completion, the claims lapse and the amount held is released to the vendor.
●
Clause 9 - Purchaser’s default
If the purchaser fails to comply with an essential term of the contract, the vendor has the right to
terminate the contract and keep or recover the deposit (up to 10% of the purchase price).
Upon termination, the vendor is entitled to the following:
1.
Any other money paid by the purchaser under the contract can be held as security for any
recoverable amounts for 12 months or until the proceedings are terminated; and
2.
Commence legal action against the purchaser to recover the deficiency on resale or damages
for breach of contract.
●
Clause 10 - Restrictions on rights of purchaser
This clause prohibits the purchaser from making claims or requisitions, as well as rescinding or
terminating the contract in relation to:
1.
ownership or location of fences
2.
services (like electricity, water, etc.) that are shared or pass through another property, or
services for other properties passing through the purchased property
3.
walls being party walls (shared with a neighbouring property) or issues related to easements
for support
4.
fair wear and tear that occur before completion
5.
promises, representations, or statements not included or referred to in the contract
6.
Crown grant conditions
7.
exploration or prospecting licences for exploring gas, minerals, or petroleum
8.
easements or restrictions that are disclosed in the contract
9.
any other matter disclosed in the contract (except certain legal encumbrances like caveats or
mortgages)
10. defects in the title to or quality of inclusions (items included in the sale)
11. changes to the nature of the title as disclosed in the contract
●
Clause 15 - Date for completion
This clause requires both parties to complete the contract by the agreed-upon completion date. If
they do not, either party with the authority to serve a notice to complete, which is a formal request
to fulfil the contract terms by a specific date, may do so.
Because this is a public auction property, there is no cooling off period (refer to notice 3, page 6 of
the contract). This means that after the contract is formed at the auction, the purchaser cannot
exercise his right to rescind (withdraw) from it.
Clause 9 applies in the event that the purchaser defaults and is unable to finish the contract within
the allotted time. In this case, the vendor may end the agreement, keep any money the purchaser
paid as security, and possibly pursue damages or resale to make up the shortfall.
●
Clause 19 – Rescission
The vendor may withdraw from the agreement at any time by serving notice prior to the
agreement's termination, as permitted by the terms of the contract. This right may only be used by
serving a notice prior to the contract's completion. It may be used in spite of any pending litigation,
requisitions, attempts to resolve disputes, or other dispute resolution procedures (such as
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