Proposed amendment closes legislative gap in NSW property transaction

The Conveyancing and Real Property Amendment Bill 2025, introduced into the NSW parliament on 27 May, proposes to modernise the legislative framework supporting the land title system – making it more adaptable to current development needs and clarifying provisions affecting vendor disclosure that have been uncertain following a decision of the NSW Supreme Court in 2021.

Deanne Sevastos, an expert in property law at Pinsent Masons, said: “The bill proposes targeted reforms to clarify the legal treatment of options in property transactions, particularly in response to the NSW Supreme Court’s decision in BP7 Pty Ltd v Gavancorp Pty Ltd.”

“That case exposed a legislative gap where put options were arguably excluded from vendor disclosure obligations, creating uncertainty for vendors and purchasers alike,” she said.

“However, a key criticism of the bill is that while it aims to restore certainty by redefining ‘option’ to include both put and call options, it arguably overcorrects the NSW Supreme Court’s decision by removing purchaser protections that were judicially recognised.”

The court found that a put option – effectively, a provision giving a landowner a right, but not an obligation, to compel someone to purchase the property at a predetermined price within a specified timeframe – could not be characterised as an option to purchase land. This is because, once the right has been exercised, there is no element of choice for the purchaser – making it an option to compel a purchase but not an option to purchase. This allowed developers to cancel contracts they had made after the owners had exercised their put option, causing fourteen property owners to lose their right to compel a sale.

Vanessa Scrivener, an expert in property law at Pinsent Masons, said: “The court had found that purchasers under put options should retain cooling-off rights because they lacked a genuine choice to enter the contract, distinguishing them from call options.”

“By legislating that neither put nor call options attract cooling-off rights, the bill may be seen as favouring vendors at the expense of consumer safeguards,” she said.

The bill amends the Conveyancing Act 1919 to clarify the regulation-making powers of both the Conveyancing Act 1999 and the Real Property Act 1900, allowing regulations and rules to be reviewed and remade.

Angie Quan of Pinsent Masons said: "The bill also introduces a new definition of ‘option’ in the Conveyancing Act to capture both an option to purchase and an option to compel a purchase of residential purchases, among other changes."