The reform passage of the Sale of Land Amendment
Bill 2016 on 10 November 2016 introduced greater protection
for developers and purchasers under the Sale of Land Act
1970 (WA) when entering into land presale contracts. The
changes come into effect 3 April 2017 and will apply to all land
Presale land contracts operate when developers sell subdivision
lots when they are not registered as the owner or have yet to
receive subdivision approvals. This is generally done for the
purposes of finance approval for subdivision development.
A 2014 WA Court of Appeal case 1 found such a presale
contract to be unenforceable by the vendor, even after the vendor
became the registered owner of the land. The decision raised
questions over the validity of such contracts in general, leaving
the legal position of both parties doubtful, as well as raise
questions as to whether a purchaser's deposit in a presale
contract dispute could be recoverable. This decision made both
sellers and purchasers apprehensive about entering into presale
contracts. In order to provide more certainty, the following
amendments were adopted.
The Nature of the Reforms
The mainstay of the reforms provide that:
Sellers must warn purchasers in writing that they do not yet
own the land. The lack of a warning in the approved form will
render the contract null and void. The purchaser's deposit will
also become recoverable.
The developer must become the registered owner of the relevant
lot within a specified timeframe. Not adhering to this will
similarly render the contract null and void. This timeframe can be
specifically provided for in the contract, otherwise a six month
default period will apply.
The developer must now make all reasonable endeavours to
satisfy the vendor's condition in the contract, including
taking steps to obtain approvals and lodging plans for the relevant
project, before the requisite timeframe expires. If the purchaser
requests this information, this must be given by the seller.
Both parties now have termination rights if conditions
aren't met or notices aren't given.
Sales deposits must now be held in an Australian trust account
(ADI) operated by a third party. These accounts may be audited by
the Registrar of Titles to check compliance.
Breaches of the Sale of Land Act 1970 (WA) now attract
a maximum penalty of $100,000.
1Barker v Midstyle Nominees Pty Ltd 
A lessee will need to demonstrate that the genuine interests of the lessor will be protected if relief is granted.
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