Home Sales: Rights, responsibilities and rules
12/07/2018
When the Residential (Land Lease) Communities Act 2013 commenced on 1 November 2015 all terms of existing site agreements that prohibited or placed restrictions on the sale of homes on site became void. The RLLC Act provides all home owners with the right to sell their home on site, including those in communities situated within a Crown Reserve.
In the second reading speech for the Residential (Land Lease) Communities Bill 2013 the then Minister for Fair Trading Anthony Roberts made specific mention of this right. He said “The bill gives all home owners a right to sell and to place a ‘for sale’ sign in or on the home.”
The right to sell on site also applies to home owners who no longer occupy their home and to executors, administrators and beneficiaries of the estate of deceased home owners.
Selling agents
The easiest way to sell a home is to appoint an agent. The agent will organise signage, advertising and appointments for prospective purchasers to view the home and community. Home owners are entitled to appoint a selling agent to sell or negotiate the sale of their home and they have total freedom about who to appoint as the selling agent. The operator cannot require a home owner to appoint them or any other person as the selling agent, even if the site agreement contains such terms.
If a home owner appoints a selling agent other than the operator, the operator must not unreasonably hinder the agent’s access to the community.
Selling agents charge commission for selling homes and there are usually other expenses home owners are required to pay. The selling agent must set out all of the fees in a written selling agency agreement, as well as the services they will perform in return for payment of the commission.
‘For Sale’ signs
Prior to displaying a ‘for sale’ sign in or on the home a home owner is required to notify the community operator of their intention to offer the home for sale. The RLLC Act does not set any limits on the size of a ‘for sale’ sign and it does not set any other requirements.
The Tenants’ Union is aware that in some communities operators are seeking to impose their own requirements on ‘for sale’ signs. This includes introducing new community rules, one of which seeks to limit the size of ‘for sale’ signs and prescribe text. The rule requires any ‘for sale’ sign to include the following words:
“Any prospective purchaser must contact the operator before paying any monies for the purchase of this home. It is essential that you get a Disclosure Statement and have the operator’s approval to live in the community.”
This rule is problematic and possibly invalid. The RLLC Act provides that a community rule is of no effect if it is inconsistent with the Act and it is our view that this rule is inconsistent because it attempts to limit a home owner’s rights where the Act provides a broad right.
The RLLC Act does not set any limitations or restrictions on ‘for sale’ signs and had that been the intention, the legislatures would have prescribed restrictions in the Act.
Secondly, the exchange of monies between the vendor and purchaser is a matter for those parties and the selling agent (if there is one). Unless they are acting as the selling agent operators should not be concerning themselves with that transaction.
The RLLC Act does require a selling home owner to advise the purchaser to contact the operator prior to entering into a contract of sale but the contract is not invalidated if that doesn’t occur. The purpose of the referral is to enable the operator to provide the prospective home owner with any necessary paperwork and as one operator puts it “to assess their suitability” for the community. It is not a breach of the RLLC Act for a contract of sale to be entered into prior to the purchaser contacting the operator.
Interference with the sale of homes is a long-standing issuein land lease communities and this push to control ‘for sale’ signs appears to be an attempt by some operators to legitimise interference. Not only is the ‘rule’ possibly invalid, it is unnecessary. The RLLC Act sets out the process for engagement between prospective purchasers and operators – additional rules are simply not needed.
Interference
The operator must not engage in or permit any interference with the sale of the home, or a home owner’s right to display a ‘for sale’ sign. Interference includes restricting access for the agent or prospective home owners and making false or misleading statements about the community.
Home owners can apply to the NSW Civil and Administrative Tribunal (NCAT) if the operator interferes with their rights. NCAT can make orders preventing interference and for compensation where interference has been proven and the home owner has suffered a loss as a result.
Purchasing
The RLLC Act also provides rights for purchasers of homes in land lease communities. They include the provision of information, inducement, fees and charges and site agreements.
Disclosure Statements
The RLLC Act requires an operator to issue a Disclosure Statement to a prospective home owner at least 14 days before entering into a site agreement with that home owner. The Disclosure Statement must be in the approved form and include certain particulars prescribed in the Act.
The RLLC Act does not require the Disclosure Statement to be given in person and there will be times when personal delivery is not possible. Section 184 of the Act makes provision for the service of notices and documents required or authorised to be given to a person under the Act. When the Disclosure Statement cannot be given personally to the prospective home owner it can be:
- sent by post to them or to an agent, or
- given personally to an agent of the prospective home owner, or
- sent by email if the prospective home owner has agreed to documents being given by email.
When a Disclosure Statement is given using one of the above methods the RLLC Act sets out when delivery is assumed to have occurred. Section 184(2) provides:
- Service of a document sent by post is taken to be effected four working days after postage, as provided for by section 76 of the Interpretation Act 1987. (A working day means a day that is not a Saturday, Sunday, a public holiday or a bank holiday).
- Service of a document to an agent is effected on the day the document is given.
- Service by email is effected on the day the document is sent by email.
Site Agreements
A purchaser needs a site agreement to occupy the home.
They can have an agreement assigned (transferred) to them by the selling home owner or ask the operator to enter into a new agreement.
A new agreement must be written and in the standard form but it can contain additional terms. Additional terms must not conflict with the standard terms, the Residential (Land Lease) Communities Act, or any other Act.
The RLLC Act provides a 14 day cooling-off period for new site agreements. Purchasers can rescind, or withdraw from the site agreement without penalty within the cooling-off period unless they have taken up residence in the home, or if the agreement was for a site and they have installed a home on it – in those circumstances the cooling-off period ceases to apply.
Independent Advice
The Tenants’ Union advises all potential home owners to seek advice before purchasing a home or signing a site agreement. It is also a good idea to talk with home owners who already live in the community.