Residential Property Law: Conveyancing Assignment - Law Course

This law assignment addresses key aspects of conveyancing and property law, focusing on residential property sales in New South Wales. It begins by outlining the essential role of a solicitor in the sales process, emphasizing adherence to legal procedures and the importance of the contract of sale, including required documentation like zoning certificates and drainage diagrams. The assignment also covers the disclosure obligations of real estate agents, as per the Property, Stock and Business Act 2002. It further explores the implications of adverse property affections and the validity of certificates. The assignment delves into the complexities of backing out of a signed contract, including contingencies and cooling-off periods. A case study involving Trev, Penny, and Sue highlights the legal principles of certainty of agreement and the rights of buyers in property disputes. The assignment concludes by referencing relevant legislation, cases, and resources.

1
LAW
Name
Course
Date

2
Question1
To sell a residential property, it is advisable for one to start the process by appointing a
solicitor or a lawyer to represent him in all the legal procedures required under law. Once that
has been done, the owner would instruct the representative to prepare a contract of sale for the
property. The reason for appointing a solicitor is because buying and selling a residential estate
requires adherence to many laws and would require a person who can understand them well. It is
the reason why the legal representatives rightly play an important role in the process. Under
section 149 of the Fair Trading Act 1986 (FTA), the contract of sale must include a copy of the
documents containing the title, current zoning certificate, and drainage diagram as provided
under s149.1 The zoning certificate is provided by the local council.2 Additionally, if the property
has a spa or a swimming pool, then other different certification forms need also to be attached.
Moreover, if the owner of the property fails to attach any of the required contractual documents
to the sale contract, the purchaser might be permitted to cancel the sales agreement within 14
days of exchange, the payment has taken place.
Question 1 (2)
Section 47 of the Property, Stock and Business Act 2002 requires a real estate agent
acting for a client in a sale or purchase of a property to disclose certain relationships and benefits
they may get in connection to the sale, client or a buyer when providing the service.3 An agent
must make such disclosers to their client and to the prospective buyers where possible. What the
agent need to disclose is whether the client is their family member, business associate, he will
receive an consideration such as money and the value of such benefits among others.
1 New South Wales Fair Trading Act 1986
2 The Tenancy Handbook (Office of Fair Trading, 2006)
3 Property, Stock and Business Agents. Act 2002 No 66.

3
Question 1 (3)
The reason why a vendor must ascertain whether the property has any adverse affection is
because any defect in title affects the seller’s ability to pass an unencumbered title to the property
during sale. It also include those matters that detract the vendors right to have a say on the estate
he has accepted to sell or the issues which prohibit the seller from conveying his title free of
encumbrance. It was evident in the case Dormer V Solo Investments (1974).4
Question 1(4)
It would be unwise to rely upon a three-year-old s149 Certificate because since February
2009, section 149 certificates have had effective progressive changes and what was there three
years ago may not be effective now.5
Question 2 (1)
Once a contract has been signed and exchanged, a vendor is locked into the sale of his
property under the contract agreement terms.6 It is very difficult for a seller to back out of a
contract after the contract has been signed even if you receive a higher offer. In many cases, the
law allows the buyers to back out but not the seller. However, even if you have signed and
exchanged the contract, if the contract contingencies principle, then there are still room for
wiggling. Contingencies help in covering the obligations that both the buyer and the seller must
meet before closing the transaction. For instance, if a buyer fails to the agreed deadline, a seller
may be legally able to terminate the sale. Additionally, the vendor could use the higher offer as a
backup. Though not guaranteed to work out in favor of the seller, it is worth trying. The seller
4 Dormer v Solo Investments Pty Ltd (1974) 1 NSWLR 428
5 Conveyancing (Sale of Land) Regulation 2010 (NSW).
6 New South Wales Fair Trading Act 1986

4
can try to challenge the first seller when it comes to fixing of the inspection items. The aim of the
vendor would be to make the buyer with first offer to back out willingly by failing to meet the
inspection contingency requirements. Once the initial buyer backs out, the seller could then
move on to the higher offer.
However, the major danger with this option is that once the first buyer goes, the second
purchaser may even ask for extra repairs or even back out. However, if a vendor decides to
continue with the higher offer, he must immediately tell the initial buyer and refund the deposit
that had been paid according to the original agreement.7 Other than that, the vendor could allow
the primary buyer to present a counteroffer. In this case that buyer may not want to, and instead
could just take his deposit and sue the vendor. On the other hand, the seller only has one day
cooling-off period, which also includes Saturday to exit the contract. For the vendor to take up
the cooling-off period, he must provide the agent with a notice of recession that is signed by all
the customers by 5pm on that day of cooling-off.
Question 2 (2)
In a residential contract, when a contract has been exchanged the process of buying a
home is legally complete. However, up to this point the contract is not usually binding and either
the buyer or the seller has the right to change their decision. In New South Wales buying a
residential property has a five business cooling-off period after the exchange of a contract.
Cooling-off period is the time given to a buyer to fully investigate the property before he
commits himself. During this period, the buyer can get out of the contract as long he gives out a
written notice. This period starts off immediately after the exchange and ends on the fifth day at
5pm. However, the cooling-off period is not applicable if the buyer bought the property at
7 New South Wales Fair Trading Act 1986

5
auction or make an exchange of the contract on the same day of the auction after it is passed. If
the buyer uses his cooling-off under Conveyancing Act 1919 to withdraw from the contract, he
will have to pay the vendor 0.25% of the buying price.8
Additionally, the buyer may use the advantage of sellers’ market to organize for a quick
contract exchange. Doing so will reduce the possibility of someone defeating the offer and
getting the buyer’s building and pest inspections taking place during the cooling-off period. It is
also possible is to back out if the property has been found to have a defect during inspection.
Question 3
With regards to Real Property in New South Wales, there must be certainty of
agreement.9 In the case of Trev, Penny and Sue, Trev got into an agreement with two different
buyers making them pay the 10% deposit for the purchase of property.10 Penny got into the
contract first, but unfortunately the property got sold to Sue who came last and had a better offer
than Penny. Trev hands over the Certificate of Title to Sue, as well as, the signed transfer after
Sue completes the payment for the property. Therefore, the issue in this case is who between
Penny and Sue is rightfully entitled to the property.
According to the New South Wales Fair Trading, exchanging contracts is necessary to
legally complete the process of buying property.11 Nonetheless, the process is not usually binding
and the buyer and the vendor have a right to change their minds. There must be copies of the sale
contract – one copy remains with the vendor while the other copy is given to the buyer. Upon
this exchange, the buyer is expected to pay a deposit to the vendor to confirm that he is serious
8 Conveyancing Act 1919 No 6.
9 Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR
10 Contracts_And_Deposits (2018) Fairtrading.nsw.gov.au
11 New South Wales Fair Trading Act 1986

6
with the purchase of the property. However, the contract is made and becomes legally binding
after the exchange of contracts and payments of deposits. Once this is done, pulling out is not
required. Any party that pulls out after the exchange of the contracts is punishable by law.12
When Sue got into the agreement with Trev, she knew nothing about the first buyer. This
implies Sue was acting in good faith when buying the property from Trev. She had no bad
intention to the other buyer. Besides she followed the right procedure because she signed the
contract, paid her 10 percent deposit, completed her payment as agreed with the vendor and
finally Trev gave her the Certificate of Title and the signed transfer of ownership. On the other
hand, Penny just got into an agreement and paid the 10 percent deposit of the property. As such,
Sue serves to be rightfully entitled to be the owner of the property because all her actions were in
good faith and she also followed the correct procedure.13 Besides, she already has the certificate
of title from Trev showing she owns the property.
However, Penny has a right to claim for the damages caused to him by Trev. The two
individuals had a written agreement on the purchase of the property. This shows that they both
had a duty to one another to remain faithful and fulfill their obligations as signed in the
contract.14 Since Penny remained loyal to Trev, but Trev breached their agreement, Trev is said
to be liable and must be answerable to the law. He is, therefore, expected to return Penny’s
deposit with interest which is said to mark the cancelation of his registration of contract with
Penny.
12 The Tenancy Handbook (Office of Fair Trading, 2006)
13 The_Sale_Process (2018) Fairtrading.nsw.gov.au
14 Bushwall Properties Ltd v Vortex Properties Ltd [1976] 1 WLR 591

7
Bibliography
A. Books/Websites
Contracts_And_Deposits (2018) Fairtrading.nsw.gov.au
http://www.fairtrading.nsw.gov.au/ftw/Tenants_and_home_owners/Buying_property/
Contracts_and_deposits.page

8
The Tenancy Handbook (Office of Fair Trading, 2006)
The_Sale_Process (2018) Fairtrading.nsw.gov.au
http://www.fairtrading.nsw.gov.au/ftw/Tenants_and_home_owners/Selling_property/
The_sale_process.page
B. Cases
Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR
Bushwall Properties Ltd v Vortex Properties Ltd [1976] 1 WLR 591
Dormer v Solo Investments Pty Ltd (1974) 1 NSWLR 428
C. Legislation
Conveyancing Act 1919 No 6.
New South Wales Fair Trading Act 1986
Property, Stock and Business Agents. Act 2002 No 66.
Conveyancing (Sale of Land) Regulation 2010 (NSW).