Most people know that a contract for the sale of land in New South Wales must generally contain a copy of the title documents, drainage and sewerage diagram and a planning certificate (section 10.7) issued by the local council.
If the property for sale has a swimming or spa pool, the contract must also annex a Pool Registration Certificate and one of the following:
- a valid certificate of compliance, or
- a valid occupation certificate (issued in the past 3 years) and evidence that the pool has been registered or
- a valid certificate of non-compliance.
In New South Wales, residential property cannot be advertised for sale until a contract of sale has been prepared.
Recently, a client contacted me in a hurry to issue and exchange a contract for her property with a pool. The decision to sell had been impulsive - prompted by an unexpected but tempting offer.
Unprepared for the sale, my client did not have the required pool certificate though she had taken steps to apply for it.
Unwilling to lose the opportunity, my client insisted we issue the contract so she could exchange. She argued that the certificate was a formality and could be provided after the exchange. We could even include a special condition in the contract requiring the certificate to be provided before completion.
The proposal sounded reasonable, but would it comply with the statutory requirements? This question made me consider the basics.
Statutory Requirements
Section 52A of the Conveyancing Act 1900 (NSW) provides:
(2) A vendor under a contract for the sale of land-
(a) shall, before the contract is signed by or on behalf of the purchaser, attach to the contract such documents, or copies of such documents, as may be prescribed.
(4) Except in so far as the regulations may otherwise provide, a provision, whether in a contract for the sale of land or any other agreement--
(a) which purports to exclude, modify or restrict any provision of this section or a regulation made for the purposes of this section, or
(b) which would, but for this subsection, have the effect of excluding, modifying or restricting any such provision,
is void.
This provision was considered in Daher v Samuel [2022] NSWSC 421 (4 April 2022).
The contract contained a provision deferring the provision of the final occupation certificate relating to the swimming pool. It promised it would be provided on or before settlement, with a right to terminate the contract at that point if that did not occur.
The Purchaser sought to rescind the contract on the basis that the pool certificate had not been annexed.
The vendor argued that the purchaser had repudiated the contract.
The Court held that the effect of such a special condition would be "to negate [the purchaser's]right to obtain the relevant certificate, prior to entry into the Contract, and substitute it with a right to terminate the Contract if the relevant certificate was not provided before settlement. Those rights are plainly different in their content, although that may lead to the same outcome, namely a right to terminate the Contract if a relevant certificate was not provided, but arising at different times."
The Court found that the Special Condition was void, and the void character of that special condition, in turn, gave rise to the purchaser's right to rescind under s 52A of the Conveyancing Act because the relevant swimming pool certificates were not provided at the time of the Contract.
Conclusion
It is important that before the contract is signed by or on behalf of the purchaser, such documents, or copies of such documents, as may be prescribed, must be attached to the contract.
For my client, the best option was to wait for a pool certificate to be obtained before contracts were signed and exchanged. To do otherwise would have run the risk that the purchaser would have the right to rescind.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.