The Law Society’s Property and Commercial Law Committee has released an amended Standard Form Contract for Sale of Real Estate together with amended Standard Conditions effective from 1 July and approved by the Real Estate Institute of Tasmania (REIT).
The key amendments to the Standard Form Contract and the Standard Conditions of Sale are:
- approval of finance rather than making the finance “available”;
- finance on reasonable terms to the purchaser;
- termination rights to the party benefitting from the particular condition;
- GST treatment of the sale; and
- inclusion of electronic signing.
Finance Clause Amendments
Two amendments have been made to the finance clause on the Standard Form Contract. The finance clause now provides that the financer “approves” the loan rather than “makes available to the purchaser” to conform with the terminology and what actually occurs in practice. The loan must now be on terms “acceptable to the purchaser, acting reasonably.” Previously the wording used was “on terms currently available in transactions of a similar nature” which fails to account for the purchaser’s specific circumstances.
Termination Rights to a Party Benefitting from that Particular Condition
Standard condition four (4) has been amended to explicitly state that the party who benefits from the condition can now terminate the contract. For example, if a purchaser is declined finance, it is now clear that they can terminate the contract which avoids situations where a vendor may not mutually agree the contract is at an end.
Goods and Service Tax (GST) Treatment
Standard condition 11(g) has been inserted to provide that if the contract does not specify the sale is plus GST or includes GST, the sale price will include GST if it is not a taxable supply or is not an input taxed supply of residential property and that the sale price is plus GST in every other circumstance.
Electronic Signing
A new clause 22 has been included in the Standard Conditions to allow for electronic signing as an outcome of the increasing prevalence of electronic signing. This clause is in line with the current legislation under the Electronic Transactions Act 2000 that an electronic signature will be conclusive evidence of a signer’s identity however, the Law Society reminds practitioners that verification of identity should occur immediately prior to or after signing to ensure witnessing requirements can still be met.
All amendments made by the Law Society’s Property and Commercial Law Committee are aiming to provide further clarity, fairness and practicality when dealing with real property in Tasmania.
