ARTICLE
12 October 2011

Australian Consumer Law reforms in relation to land

New consumer guarantees replace trade practices and fair trading legislation with a consistent national scheme.
Australia Real Estate and Construction

New Consumer Guarantees

New consumer guarantees take effect from 1 January 2011 as part of the new Australian Consumer Law reforms.

The guarantees replace the existing regime of implied conditions and warranties under the Trade Practices Act 1974 (Cth) and the various state and territory fair trading legislation with a consistent national scheme. The Trade Practices Act will be renamed the Competition and Consumer Act 2010 (Cth)

False and Misleading Representations in Relation to Land

The provisions in the Trade Practices Act about false and misleading representations in relation to land have been reproduced in a simulation in the new legislation. But a new provision has been added prohibiting false and misleading representations about offers, gifts or other free items in connection with sales of land. It extends to 'rebates', which includes 'cash-back offers'. While these offers can still be conditional upon certain obligations being fulflled by a consumer, once they are fulflled the new provision applies so the 'cash- back' must be provided within the time specifed, or if no time is specifed, within a reasonable time.

The new law also introduces an infringement notice system by which the ACCC can issue notices to persons who breach the law instead of bringing a criminal prosecution.

Further impact of Australian Consumer Law on the REIQ Residential Land and Building Contract from 1 July 2010.

Pest and Building Inspection

The pest and building inspection clause was considered unfair as only the buyer had a right to terminate for a unsatisfactory building and pest report. If no response was received from the buyer at all, there was automatic satisfaction with pest and building condition. Under the version 7 of the contract, both parties have termination rights and the automatic satisfaction of the clause is removed.

Now, the buyer must tell the seller by 5pm on the inspection date whether it terminates due to unsatisfactory reports, or confrms satisfaction with the reports, or waives the beneft. If the seller does not receive any of the above notices from the buyer, the seller has a right to terminate. If the seller has not terminated, the buyer can give notice of satisfaction or waiver after the inspection date. Once the buyer waives the beneft of the conditions, the seller's termination right under this clause ends. On termination under this clause by either party, the deposit is returned to the buyer.

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.

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