Real estate: 5 Minute Fix 09

Electronic conveyancing updates – ARNECC Model Participation Rules and new guidance

The Australian Registrars' National Electronic Conveyancing Council (ARNECC) has published a draft version 6 of the Model Participation Rules. The draft Rules include changes to client authorisations and to the verification of identity process. Industry stakeholder forums have been conducted in several States to review and discuss the draft Rules. ARNECC extended the public consultation period with it recently closing on 2 March 2020. A copy of the draft Rules is available here, with the final version expected to be published later this year.

ARNECC has also published a guidance note for e-settlement subscribers and their instructing practitioners on conducting electronic conveyancing. For more information see, the ARNECC Guidance Note.

Electronic conveyancing updates – Victoria

Further residual documents are now available in the PEXA network for Victoria, including:

Change Proprietorship – Transfer to the Crown
Change Proprietorship – Transfer and Creation of Easement
Change Proprietorship – Transfer by Council – Rates Recovery
Change Proprietorship – Transfer by Sheriff
Change Proprietorship – Transfer to Religious Successor Trustee

Electronic conveyancing updates – Western Australia

Landgate has increased the scope for electronic lodgement of land registry documents.

Effective from 10 February 2020 the following is available in the PEXA network for WA and from 1 March 2020 you will be required to lodge these documents through the PEXA network (subject to a few exceptions):

Additional transactions for freehold land:

• Caveats that do not affect all the registered proprietors.
• Caveats or mortgages as to part of the land, such as one of the lots in a multi-lot title.
• Titles held in capacity, such as executor, administrator or trustee in bankruptcy (not including transfer documents).
• Discharge of mortgage or mortgage of a registered interest in land.
• Extended caveat claims.

Effective from 10 February 2020 the following is available in the PEXA network for WA and from 31 March 2020 you will be required to lodge these documents through the PEXA network (subject to a few exceptions):

Crown land

• Mortgage (interest only)
• Discharge of mortgage (interest only)
• Caveat (land only, where the evidence supporting the claim is between the State of WA and the caveator)
• Withdrawal of caveat (land or interest)
• Transfer (land only)
• Transfers creating conditional tenure land (conditions must be attached)
• Transfers creating covenants (covenant must be attached).

Additional transactions for freehold land:

Please also refer to Landgate's Customer Information Bulletins 327 and 328 and the 2020 Landgate list of documents eligible for eConveyancing.

ACT – Amendments to the Residential Tenancies Act 1997 (ACT)

The Residential Tenancies Amendment Bill 2019 (ACT) was passed by the Legislative Assembly on 13 February 2020 and the Residential Tenancies Amendment Act 2020 (Cth) notified on 25 February 2020.

This Act will give effect to legislative recommendations from the 2016 review of the Residential Tenancies Act 1997 (Qld) and provides additional protections to tenants. These amendments include:

• an increase in the notice periods required to be given by landlords to terminate periodic leases where the landlord or a person close to them wishes to move in;
• a new right for tenants to terminate fixed term leases early in order to move into social housing or an aged care facility;
• the imposition of limits on the landlord’s right of access for the purpose of property inspections by prospective buyers and a right for tenants to terminate a fixed term tenancy if a sale process is taking too long or should have been disclosed prior to entry into the lease;
• a reduction in the maximum rent payable in advance to two weeks; and
• the provision of greater powers to the ACT Civil and Administrative Tribunal’s to resolve tenancy disputes.

Separately, the Residential Tenancies Amendment Bill 2020 (ACT) was presented to the Legislative Assembly on 13 February 2020. This bill proposes to amend the Residential Tenancies Act 1997 (QLD) by:

• improving protections for occupancy by the introduction of mandatory occupancy principle into occupancy agreements;
• clarifying the difference between occupancy agreements and residential tenancy agreements;
• clarifying the application of the occupancy framework to people who reside in residential parks; and
• modernising the legal framework for share housing.

ACT – Public feedback sought on community schemes law reform

The period for public feedback on the drafting of the Community Land Management Bill 2019 (ACT) and Community Land Development Bill 2019 (ACT) closes on 28 February 2020. These bills have been prepared in alignment with the major 2015 strata scheme reforms, aiming to make community land development legislation more flexible, with improved transparency and accountability.

NSW – NSW Digital Driver's Licences cannot be relied upon when verifying a person's identity

The Conveyancing Rules imposed by the Real Property Act 1900 (NSW) require lawyers to verify the identity of their clients prior to acting on any conveyancing transactions. A current Australian driver's licence is one of the most common identity documents lawyers rely upon when verifying their clients' identity.

On 17 January 2020, the NSW Office of the Registrar General advised that at this stage NSW digital driver's licences do not meet the Verification of Identity standard for conveyancing transactions. A NSW digital driver's licence doesn't replace the original plastic driver's licence issued by Service NSW. Currently digital versions of a plastic driver's licence, may only be used for limited purposes, for example complying with the requirement to produce a driver licence while driving a motor vehicle.

NSW – Biowood included in combustible cladding crisis

The combustible cladding crisis continues in Australia with the NSW Civil and Administrative Tribunal (NCAT) broadening the scope of cladding products considered to be non-compliant with the Building Code of Australia to include Biowood, a composite timber product, in The Owners Strata Plan 9288 v Taylor Construction Group Pty Ltd and Frasers Putney Pty Ltd [2019] NSWCATCD 63.

In this case, the respondents were engaged to undertake works at a multi-story, residential property which involved installing external Biowood cladding as architectural attachments to the external walls of the building. Whilst there had been no fire incident at this property, the applicant alleged that that the Biowood, installed as architectural attachments on the external walls of the building, were defective as they are combustible. The respondents submitted that the façade of the building means the external walls, but does not include an attachment to the external wall itself.

In its determination, NCAT found that Biowood used as an attachment to non-combustible external walls presented an undue risk of fire spread and was therefore fit for purpose. The respondents were ordered to remove the Biowood attachments and replace them with attachments complying with the relevant codes, standards and statutory warranties.

Following this decision, it is likely that many property owners and owners corporations may wish to bring claims against builders and building professionals to remove and replace any Biowood, which is a popular product used in Australia.

For more information, see “Combustible cladding update: a new threat emerges”.

Queensland – New witnessing requirements for land registry documents now in effect

The new witnessing requirements for instruments and documents witnessed outside Australia by an Australian Consular Officer or authorised employee of the Commonwealth are now in effect. On and from 24 February 2020, any paper Titles Registry instrument or document must be accompanied by the following supporting evidence:

• a completed Australian Embassy/High Commission/Consulate Identity and Witnessing Certification which lists the identity documents produced to the Australian consular officer or authorised employee of the Commonwealth; and
• a letter from an Australian legal practitioner or authorised employee of an Australian law firm or financial institution stating that they have taken reasonable steps to ensure that the individual is the person entitled to sign the instrument or document.

Changes to the Land Title Practice Manual (Qld) have clarified that there is no longer a requirement to outline the steps taken to verify “entitlement to sign” in the letter from an Australian legal practitioner or authorised employee of an Australian law firm or financial institution.

More information can be found at paragraphs [61-2200], [61-2530] and [61-2540] of the Land Title Practice Manual.

Queensland – Foreign "Absentee Owner" Land Tax Surcharge Exemption Guidelines

The Revenue and Other Legislation Amendment Act 2019 (Qld) introduced a 2% absentee owner land tax surcharge for Queensland land valued at $350,000 or more owned by "foreign companies" and "foreign trusts". This surcharge is in addition to the usual land tax payable and applies to all types of land unless that land is otherwise exempt.

The Queensland Government has since announced that it proposed to introduce guidelines to exempt certain taxpayers from the surcharge in the 2019-2020 Mid-Year Fiscal and Economic Review, released on 12 December 2019, which says:

"The Queensland Government is committed to maintaining competitive taxation settings, and will establish guidelines, in consultation with stakeholders, that provide relief for commercial activities that make a significant contribution to the state economy. This will ensure Queensland continues to be an attractive destination for investment."

The detail of those guidelines is not yet available. However, they are expected to mirror the Victorian regime which accommodates exemptions for listed groups, widely-held trusts and taxpayers with development projects or businesses that significantly contribute to Queensland's economy.

It should also be noted that the granting of any relief (regardless of the eventual guidelines) will be on an ex gratia basis, wholly at the discretion of the Under Treasurer/Commissioner.

Victoria – Foreign purchaser additional duty trap from 1 March 2020

The Victorian Commissioner of State Revenue has advised that on and from 1 March 2020, he will no longer apply the “practical approach” when considering whether discretionary trusts are foreign persons for the purpose of foreign purchaser duty.

If the trust deed allows the distribution of more than 50% of the capital of the estate of the trust to one or more foreign persons, the discretionary trust will be treated as a foreign trust and will incur an additional 8% duty on top of the general transfer duty rate of 5.5%

For more information, see “Victorian foreign purchaser additional duty trap to spring in autumn”.

Victoria – Sale of Land Act 1962 (Vic) amendments took effect on 1 March 2020

On 1 March 2020, the following amendments to the Sale of Land Act 1962 (Vic) (Act) came into effect:

All residential off-the-plan contracts of sale which contain a sunset clause must now include a statement in the sunset clause that complies with the new section 10F of the Act. In summary, the sunset clause must include statements that:

• the vendor is required to give notice of a proposed rescission of the contract under the sunset clause;
• the purchaser has the right to consent to the proposed rescission but is not obliged to consent;
• the vendor has the right to apply to the Supreme Court for an order permitting the vendor's rescission; and
• the Supreme Court may make an order permitting the vendor's rescission if satisfied that making the order is just and equitable in all the circumstances.

The Director of Consumer Affairs Victoria may now make guidelines in relation to what "material facts" about a property must be disclosed to purchasers under the Act. The Material Fact Guidelines have now been published.

Terms contracts for residential land which is not also agricultural land with a price of less than $750,000 are now prohibited.

The sale of residential land under a rent-to-buy arrangement is now prohibited unless the arrangement is entered into by the Director of Housing, a registered housing association or is otherwise permitted by the regulations.

The sale of an option to purchase land under a land banking scheme must comply with certain requirements in the Act. A land banking scheme is a scheme for the proposed development of land by subdivision under which members of the scheme contribute money to benefit from the scheme but do not have day-to-day oversight of the scheme and do not have a proprietary interest in the land. Off-the-plan contracts, registered investment schemes or options issued by holders of Australian financial services licences are excluded from the new requirements. At a high level, these requirements include:

• the option fee must be paid to the vendor's legal practitioner, conveyancer or licensed estate agent to be held on trust, otherwise the purchaser may rescind the option agreement;
• the option agreement must specify that the option fee is to be held on trust for the purchaser;
• the vendor must notify the purchaser when a plan of subdivision of land included in the land banking scheme is registered;
• the option will automatically expire if the right to purchase is not triggered within 5 years from entering into the option agreement; and
• the purchaser is automatically entitled to the immediate refund of the option fee if the option fee is not held on trust as required by the Act (and the purchaser rescinds the option agreement), the option automatically expires or the event triggering the purchaser's right to purchase does not otherwise occur.

WA – Duty relief

Amendments to the Duties Act 2008 (WA) and Duties Regulations 2008 (WA) were announced on 26 February 2020, to ensure that transfer duty relief will continue for Western Australians who subdivide their property using the strata titles scheme without a change in land ownership.

These amendments are required following a WA State Administrative Tribunal decision in February 2019 that created duty outcomes that were inconsistent with the Commissioner’s assessment practices, including requiring full duty to be paid in some cases relating to the termination, creation or re-subdivision of strata titles, even where the land ownership did not change.

The proposed amendments will address the “unfair” outcomes of the decision and will correct the duty outcomes for subdivisions occurring between the date of the SAT decision and the date the amendments take effect.

The amendments are to apply from the date the impending strata reforms come into operation, currently proposed for 1 May 2020.

National – Changes to the regulation of Enduring Powers of Attorney

The Federal Attorney-General is considering potential changes to the regulation of Enduring Powers of Attorney for all jurisdictions, including the implementation of a national register to create greater consistency across the jurisdictions and enhance the transparency of EPOA documents supporting financial transactions.

The Attorney-General’s Department is calling for submissions from interested parties on its Consultation Regulation Impact Statement. Submissions can be emailed to [email protected] by 11.59pm (AEDT), Monday 9 March 2020.