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Clarification of Form 1 issues

14 Jan 14

Form 1 searches

There has been some confusion recently as to whether an agent is required to undertake new searches for a Form 1 following the commencement of the new sales legislation on 1 January 2014. 

Consumer and Business Services has provided the following advice:

"The transitional provision in the variation regulations allows a Form 1 vendors statement to be prepared on the form that was in operation immediately before 1 January, until 28 February (inclusive). This is so a person who obtained their PIR in late December does not have to obtain new searches to prepare a Form 1 in early to mid January.  (emphasis added)

If a person chooses to prepare a vendor's statement on the Post January Form 1, they should obtain new searches because the pre 1 January searches will not contain information on the new legislation that was added to the Form 1 on 1 January.

I understand there are also queries about whether a person can use a PIR obtained in October to prepare a vendor's statement in January, using the form in operation immediately before 1 January. The LABSAC Act requires that a vendor's statement be accurate on the date it is served. It also requires the agent to ensure that the searches are conducted. While the Act does not place a limitation on the time between the conduct of the searches and the completion of the statement, as the length of time increases, so does the risk that the information provided by the PIR and other searches is no longer accurate. As you know if the vendor's statement is not accurate the purchaser may cool-off any time before settlement, or apply to a court of competent jurisdiction to avoid the contract or the payment of compensation. The court may make any order it thinks just in the circumstances of the case. Hence, before preparing a vendor's statement, consideration should be given to the risk that the vendor's statement will not be accurate if prepared using a PIR and other searches obtained prior to 1 January."

Delivery of entire Form 1

A number of Members have expressed concerns over the recent changes to the requirement from 1 March 2014 to deliver the entire Form 1 to purchasers. REISA is in dialogue with the Minister's office about this issue and we will advise Members when more information becomes available. REISA is advocating very hard for the reintroduction of the two approaches previously permissible before 1 January.