Snapshot
- An instalment contract is a contract for the sale of a lot in a subdivision comprising five or more lots where such contract provides for purchase money to be paid by four or more part payments.
- The Land Sales Act 1964 prohibits the sale of any lot pursuant to an instalment contract unless the sale complies with the provisions of the Act.
- If an instalment contract does not comply with the relevant provisions of the Act, the purchaser may rescind the contract and the vendor may be fined $1,100 or face possible imprisonment for a maximum period of six months (or both).
Recently, Land and Property Information (LPI) listed the Land Sales Act 1964 (the Act) on its agenda for repeal, claiming that instalment contracts are so rarely used that the Act represents a regulatory burden rather than a useful mechanism. However, it appears instalment contracts are regaining popularity to assist developers fund the development of land.
The Act prohibits the sale by instalment of four or more payments of any lot within a subdivision comprising five or more lots, unless the sale complies with the provisions of the Act (s 4). Exemptions apply to any instalment contract under which the vendor is a statutory body representing the Crown or a local council (s 6(2)).
If an instalment contract does not comply with the relevant provisions of the Act, the purchaser may rescind the contract and the vendor may be fined $1,100 or face possible imprisonment for a maximum period of 6 months (or both) (s 24).
The provisions of the Act have not been judicially considered in great detail, suggesting a possible lack of awareness among lawyers.