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Sale of Land Act Amendments – Key Changes


Sale of Land Act Amendments – Key Changes


The Victorian Government has made sweeping amendments to the Sale of Land Act 1962 (Vic) (the Act). The amendments provide additional purchaser protections, whilst restricting the sale of property on ANZAC day. The amendments discussed in this article take effect by 1 March 2020 unless otherwise indicated. Key changes to the Act are:

  • Sunset clauses on off-the-plan residential houses have been restricted to protect purchasers
  • Term contracts below a prescribed amount are prohibited
  • Rent-to-buy arrangements prohibited
  • Land banking schemes to include financial protections for purchasers
  • Past-use disclosure by the vendor is more onerous
  • Property auctions are prohibited before 1pm on ANZAC day

Sunset Clauses

The Act restricts the option to exercise sunset clauses for residential off-the-plan contracts. Sunset clauses allow either party to end a contract if certain conditions have not been met by a specified time. This is otherwise known as rescission and both parties are put back in the same position as if the contract was never entered into.

Under the amendments, a vendor can only exercise a sunset clause for a valid reason, and they require consent from the purchaser.

What is a valid reason?

A valid reason is either:

  • Plan of subdivision not registered
  • Occupancy permit not issued

What is consent?

Consent can only be provided if the vendor provides the purchaser with 28 days written notice. The notice must include the following:

  • Reason for rescission
  • Reason for delay of registration or occupancy permit
  • Statement that purchaser not obliged to consent

Can a court intervene?

Should the purchaser withhold consent, the vendor can make an application to the Supreme Court of Victoria. An application for rescission will not be granted if it is made in bad faith. The court will have regard to the following factors:

  • Reasonableness of the vendor
  • Reason for delay of registration or occupancy permit
  • Likely date of future registration or occupancy permit
  • Increase in value of the property
  • Effect of rescission on purchaser

Compulsory Statement

The amendments also make it compulsory for vendors to include the following information for an off the plan contract of sale:

  • Vendor 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 of the contract but is not obliged to consent
  • The vendor has the right to apply to the Supreme Court of Victoria for an order permitting the vendor to rescind the contract
  • The Supreme Court of Victoria may make an order permitting the rescission of the contract if satisfied that making the order is just and equitable in all the circumstances

There are substantial penalties for not including the compulsory statement.

When do they take effect?

The compulsory statement requirements take effect by 1 March 2020.

The amendments concerning the exercise of a sunset clause are backdated to 23 August 2018. This means that any option to exercise a sunset clause after this date must meet the new requirements, regardless of when the contract of sale was signed.

Terms Contracts

The amendments protect vulnerable purchasers from terms contracts. The amendments make it an offence to arrange, advertise, broker or induce a person to enter into a terms contract for residential land (other than farming land) for a prescribed amount.

The purchaser may also set aside the terms contract if it is less than the prescribed amount. What is a prescribed amount is yet to be determined, although it is expected to be $400,000.

What are they?

A contract becomes a terms contract if the purchaser pays the vendor in instalments or if they take possession of the land prior to settlement. This can be a disadvantage for purchasers who make payments, but then default at settlement as they are unable to recoup their instalments.


Rent-to-buy contracts are prohibited for residential purchasers. The new provisions aim to protect young purchasers from entering into rent-to-buy contracts, but then never being able to afford the property.

What are they?

A rent-to-buy contract occurs of a renter (lessee) is given the option to purchase the property. These leases are often at a premium to regular leases.

Land Banking

Land banking schemes have been tightened in favour of prospective purchasers. The amendments make it compulsory for vendors to hold the purchaser’s deposit on trust, and that the deposit is refunded if the land is not developed within 5 years.

What are they?

Land banking schemes involve a person purchasing a small section of land in a large block of land with the anticipation that the large block of land will be developed in the future. There have been several examples of land banking schemes collapsing with purchasers losing their investment.

Past Use Disclosure

The amendments make it easier for purchasers to prove that the vendor did not disclose a “material fact”. Material facts include the unfavourable past history of the property (eg site of a homicide), or if it has any substantial defects. Whilst the principle of “buyer beware” still applies, the onus of proof has been reduced. Consumer Affairs Victoria will publish guidelines for what should be disclosed.


Real estate auctions are prohibited before 1pm on ANZAC day. This will bring the real estate sector up to date with what is normal business practice for the day.

If you wish to learn more about any of the above, please contact Esther Zhang on (03) 9604 9400.

Disclaimer: This article is general commentary on a topical issue and does not constitute legal advice. If you are concerned about any topics covered in this article, we recommend that you seek legal advice.