The reforms target both real estate agents and property developers and, given their widespread relevance, warrant some attention.

The first area that has been targeted is the practice of “underquoting”, said to be a growing practice intended to artificially manipulate the interest in a property.  

A typical example of underquoting would be advertising a property at offers over $450,000, when in actual fact the target price (and the lowest offer likely to be accepted) would be more like $500,000 or more.  

Potential purchasers waste time and money in investigating the property and the interest level in the property is artificially inflated.

Changes have therefore been made to the Property Stock and Business Agents Act 2002, coming into effect on January 1, 2016.  These changes make the agency agreement with the vendor critical.  

In that agency agreement the agent must give the vendor a reasonable estimate of the likely selling price of the property.  

That reasonable price can be expressed as a range, but with a maximum variance of 10 per cent.  

If the agent's estimate changes over time, this must be changed in an amended agency agreement.  The agent must be able to substantiate the estimate they have given.

The agent cannot then advertise a selling price that is less than the reasonable likely selling price stated in the agency agreement.

 Agents are also now prohibited from advertising prices as “offers over”, “offers above” or similar language or symbols.  This will be quite a big change for some agents who regularly employed such pricing in their advertising.  

A more difficult rule to police will be that agents are no longer permitted to tell anyone when they are marketing a property that it will likely sell for less than the advertised price.  

Not only are agents subject to a fine if it is found that they have done so, but they also face the prospect of being ordered to pay their commission to the government's compensation fund.

It’s yet to be seen how strictly policed the above changes will be, but along with protection for consumers there is without doubt an added administrative burden on agents.  

We wait to see how this will work in practice.

The other big change brought in by the state government is to sunset clauses in off-plan-contracts.  

Sunset clauses are clauses that provide for the rescission (a fancy lawyer way of saying cancelled as though it never happened) of a contract if the lot to be created in the off-the-plan contract is not created by a certain date.  

Given the number of new developments in the Orange area this is potentially very relevant to a number of locals.

Much of the publicity in this space has been around the practice of developers delaying completing a project so that the sunset clause passes, triggering a right of rescission.  The motivation to do so is strong in a rising market as a developer can potentially obtain a much higher sales price than they got initially.

The Conveyancing Act 1919 has been amended to invalidate any contract clause which gives a developer an automatic right to rescind an off the plan contract after a sunset clause is passed.  

Instead the vendor must give the purchaser a notice that they propose to rescind the contract, and give the vendor 28 days to consent.  

If a purchaser doesn't consent to the proposed rescission, the vendor must get an order from the Supreme Court.  

When considering whether to make an order the Supreme Court will consider whether or not rescission is “just and equitable in all the circumstances”.  

The court will look at factors such as the terms of the contract, any increase in value of the property, whether the vendor has acted unreasonably or in bad faith, the reasons for the delay in completion, and other relevant matters.

Again this legislation is too new to know precisely how it will operate, but it has certainly made the rights of rescission much more difficult to exercise.  

We may start to see much longer sunset dates being set, but developers will need to be careful to ensure that they aren't so long as to discourage purchasers, or create problems with the expiry of unconditional finance.  Watch this space.

Michael Evans is a solicitor at Whiteley Ironside and Shillington