Off-the-plan buyers in NSW: you are safer than you think
Amendments to the Conveyancing Act 1919 will make it safer for investors buying off-the-plan in strata properties, according to Dean Claughton of Coleman Greig Lawyers.
Major target is sunset clauses that allow off-the-plan contracts to be terminated in the event that the development or registration isn’t finalised. It is a clause in the contract that will rescind the agreement if the registration is not finalised by the ‘sunset date’. The date is usually considered the latest date by which the registration will be complete.
On November 17 2015 the NSW government passed the Conveyancing Amendment (Sunset Clauses) Act 2015 to provide further protection for off-the-plan buyers.
“There were concerns that some developers were using ‘sunset clauses’ as a way of terminating an off the plan contract in order to line their own pockets. There had been reports of developers delaying projects so that this clause could be activated giving them an opportunity to sell at a higher price should the market be on the improve which meant buyers would potentially lose all of their legal and conveyancing expenses,” said Mr Claughton.
“A new section is now in the Conveyancing Act 1919 that aims to prevent developers from unreasonably rescinding a contract under a sunset date clause. A developer must now give a buyer 28 days notice prior to rescinding under a sunset clause and must give reasons why,” advises Mr Claughton.
“Now the developer will only be able to successfully rescind a contract if they have written consent from the buyers, an order from the Supreme Court permitting rescission or the reason for the rescission comes within a category permitted by regulation (however no regulations have been made yet).”
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