Nearly all contracts for the sale of land in Western Australia incorporate the “Joint Form of General Conditions for the Sale of Land”.  These are generally just referred to as the General Conditions and have been provided to the industry by the Law Society and the Real Estate Institute of Western Australia.

It is an obligation of the real estate industry and all real estate sales persons to provide both the Buyer and the Seller with a copy of the General Conditions either at, or before, the time of signing the Contract for the Sale of Land.  Most of the formal documents used by the real estate industry provide for the Buyer and the Seller to sign saying that they have received a copy of the General Conditions at the time of signing.

The General Conditions provide all of the rules which are referred to when something goes wrong in the same process.  The rules provide the method of resolution of disputes between the Buyer and Seller in relation to the performance of the contract.  The main matters covered by the General Conditions are listed as follows:

·         Deposit

·         Settlement

·         Delays in Settlement

·         Possession

·         Outgoing Adjustments

·         Warranties by Seller

·         Terms Contracts

·         Costs

·         GST

·         Default

Under each of these headings there are full details provided and it is worth knowing where you can find the resolution to the terms of the contract when required.  The most common use of the General Conditions is in relation to delays in settlement and the second most common would be the use in relation to default.

The common rule in relation to delays in settlement is that whichever party is at fault in causing the delay in settlement has a three day grace period from the Settlement Date before any penalty can be imposed, but as soon as the three day grace period has expired the party causing the delay is liable to pay interest, currently at the rate of 9% per annum from the Settlement Date.

In relation to default, in most contracts the party who has caused the default can be issued a notice giving them ten working days to rectify the default, after which the party issuing the notice is entitled (but is not obliged to) issue a notice terminating the contract.

There are some General Conditions which are generally excluded from farming contracts.  The General Conditions are essentially devised for residential premises rather than farms.  The General Conditions provide that the Seller should remove all vehicles, rubbish and chattels from the property.  It is well known that all farms have their own rubbish tip and this clause is generally excluded to provide that the rubbish tip remains.

Similarly, there is a clause relating to boundary fencing and some farms have boundary fencing on convenience lines rather than the precise boundary line.  This clause is often excluded for that reason.  Similarly, again, there is a clause saying the property will be in the same condition as inspected.  This clause is usually excluded from farm contracts as farms are often inspected and the contract signed in spring and settled in autumn when the condition of the property is vastly different.

All of the solicitors and conveyancers at WA Property Lawyers are well versed and have a thorough knowledge of the General Conditions and can explain those as required by their clients.

Take Home Message

Both Buyers and Sellers should review and know the content of the General Conditions prior to completion of their Contract.