Mortgagee and Receiver/Manager Sales – obligations with respect to smoke alarms and residual current devices

Recent amendments to the Electricity Regulations 1947 and the Building Regulations 1989 impose obligations on owners selling residential properties to ensure that residual current devices (RCDs) and compliant smoke alarms are installed in the property being sold prior to settlement or the passing of possession. In this context, the term `owner’ could be wide enough to include mortgagees exercising a power of sale and will certainly include a receiver or receiver and manager exercising a power of sale.

Significant penalties can apply if the regulations are not complied with.

RCDs

The Electricity Regulations 1947 have been amended to insert a new part in relation to RCDs (Part IV – Residual Current Devices). This part came into effect on 9 August 2009.

The regulations impose an obligation on owners of residential premises to install two RCDs, in accordance with Australian and New Zealand Wiring Rules, prior to transferring (or renting) the premises.

Certain exceptions apply where RCDs do not need to be installed, such as where the premises are to be demolished or where there is not an appropriate switchboard.

The penalty for not complying is $100,000 for a body corporate and $15,000 for an individual.

Smoke alarms

The Building Regulations 1989 have been amended to require an owner selling a residential property to ensure that compliant smoke alarms are installed in the property prior to possession of the property passing to the buyer. The regulations came into effect on 1 October 2009.

In summary, to comply with the regulations, the following criteria must be met:

• the dwelling must meet the requirements for smoke alarms and smoke hazard management prescribed in the building code applicable at the date of installation of the alarms;
  
  
• the smoke alarms in the property must be less than 10 years old;
  
  
• each smoke alarm must be in working order; and
  
  
• each smoke alarm must be connected to the main power supply (or a specified exemption from this requirement must apply).

The penalty for non-compliance can be as high as $5,000.

Summary

In light of the new regulations, mortgagees in possession of residential premises and receivers/receiver managers selling residential premises should engage a qualified electrician to inspect the premises to ensure that RCDs and compliant smoke alarms are installed prior to settlement (or the date that possession passes to the buyer if this is before settlement).

Please email Geoff Stevens, Partner on geoff.stevens@lavanlegal.com.au or Tim Morgan, Solicitor, tim.morgan@lavanlegal.com.au if you require any further information.