A Change In The Law Regarding Zoning Certificates - October 2022

By Guest Blogger, David Singh, Solicitor,

Conveyancing & Property Lawyers

The information Councils are required to include in zoning certificates in New South Wales is changing as at the 1st of October 2022. This may mean every vendor selling a property in NSW needs to update the zoning certificate in their sale contract before they exchange contracts. If an older out of date zoning certificate is used in exchanging contracts then the purchaser may gain legal rights against the vendor. It would be prudent to consider updating each contract for sale of land by updating the zoning certificate in it before exchange of contracts.

Background

As you may be aware each Contract for Sale of Land (“contract”) for the sale of a property in New South Wales must include certain prescribed documents in the contract to satisfy vendor disclosure legislation.

In most cases one document that must be included in the contract is a zoning certificate. A zoning certificate is also currently known as a section 10.7 certificate and has also been known as a section 149 certificate.

An issue that has arisen for contracts for sale of land where the contract is not exchanged on or before 30 September 2022.

On and from 1 October 2022 the information that each Council is required to include in zoning certificates will change.

Where a contract for sale of land is exchanged and the contract does not include a current zoning certificate and/or the certificate does not specify the true status of the land then a purchaser may acquire rights against a vendor. These rights may include:

1.      The right to rescind (cancel) the contract within a certain time after the date of exchange of contracts, and
2.      The right to claim from the vendor damages, expenses, loss and/or liability because the zoning certificate in the contract does not specify the true status of the land.

In most cases most buyers will want to proceed with the purchase, will want to settle and will settle the purchase.

In rare cases a purchaser may decide they do not wish to proceed to settlement, for example if the purchaser is having trouble obtaining finance. At that stage the purchaser will ask their solicitor to see if they can find a way out of the contract. One way a purchaser may be able to rescind (cancel/get out of) the contract or seek damages from the vendor is to show that the zoning certificate in the contract does not specify the true status of the land for example because the zoning certificate in the contract is not up-to-date.

Possible solution

A possible solution to avoid some issues related to the change in legislation is to ensure that the zoning certificate in the contract is up to date and includes all the required information. This may mean that the zoning certificate each contract needs to be updated before exchange of contracts occurs.

A section 10.7 (2) certificate costs about $62. A section 10.7 (2) and (5) certificate costs about $156.

I anticipate it will take no longer than two weeks, and probably a much shorter time, to obtain the updated zoning certificate. Usually it is possible to order and receive an updated zoning certificate within about two business days, depending upon the property and the local council. Given the change in the law it may take longer to obtain an updated zoning certificate because I anticipate that there will be a number of solicitors ordering updated zoning certificates for every current contract for sale of land.

Whilst updating the zoning certificate in the contract may delay exchange of contracts it is likely to be far better to wait and exchange contracts with an updated certificate than to race to exchange contracts only to find that the purchaser has additional rights and may elect to rescind (cancel) the contract and may also have additional rights to take action against the vendor.

We strongly recommend that each person or party considering entering into a contract for the sale or purchase of land to obtain their own independent legal advice before exchanging contracts.

For further information please contact:

Mr. David Singh
Legal Practitioner
Conveyancing & Property Lawyers Pty. Ltd.
0475 708 598 / 02 9232 0050
Liability limited by a scheme approved under Professional Standards Legislation.

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