By Shanna Kruger, Partner

The Bill makes a number of small but important changes to improve the legislation and keep it current. When these commence it will be important to keep these in mind while negotiating and drafting documents.

Some changes of note are:

1. Options to compel purchase – Put Options

The Bill resolves uncertainty around the application of the legislation to put options which was highlighted by the Supreme Court’s decision in BP7 Pty Ltd v Gavancorp Pty Ltd [2021] NSWSC 26, specifically that the vendor disclosure requirements and cooling off provisions that apply to an option to purchase residential property also apply to options to compel a purchase (‘put options’).

Things to consider about the amendment:

• Division 9 of the Conveyancing Act – will be amended so that cooling off rights, plus the terms, conditions and warranties prescribed by the Conveyancing (Sale of Land) Regulationapply generally to options. A new definition of ‘option’ includes both:

• • an option to purchase residential property, and
  • an option to compel the purchase of residential property.
• No cooling off period for certain contracts – s 66T(d) of the Act will apply so that contracts made in consequence of the exercise of an option (both to purchase and to compel the purchase) have no cooling off period. This replicates an exemption currently provided for by section 17(3) of the Conveyancing (Sale of Land) Regulation.

These obligations will commence on assent of the Bill.

2. Cooling off notice – for all contracts

The change to the definition of option above has meant that minor changes need to be made to the prescribed form of cooling off notice set out in Schedule 5 to the Conveyancing (Sale of Land) Regulation, not only for option contracts but for all contracts for the sale of residential property.

• Commencement and transitional arrangements – while changes to the form of cooling off notices will commence on assent, a transitional provision will apply so that a contract or option can include either the old or new form of cooling off notice up until 31 May 2026.
• This provision, to be included as new section 28 Conveyancing (Sale of Land) Regulation, means that a contract or option will not be invalidated simply because it has not been updated to include the new prescribed form. Contracts exchanged on and from 1 June 2026 will need to include the new form of cooling off notice prescribed by the amendments.

3. s 88B Instruments – release of certain positive covenants and restrictions by a prescribed authority

The Bill will expand the types of interest that can be released by way of a s88B instrument lodged with a plan. Interests that will be able to be released are:

• a positive covenant for maintenance or repair (created under s 88BA);
• a restriction on the use of land imposed by a prescribed authority under s 88D or s 88E; and
• a public positive covenant.

These amendments will commence on proclamation, after updates to NSW LRS processes.

If you are looking to enter into a new option agreement or contracts of sale, want some advice on s88B instruments and titling structure please contact Shanna Kruger.