What “off the plan” property sales means for you
Recent changes to the Conveyancing Act aim to prevent developers from rescinding the “off the plan” contract for residential property relying on the sunset clause.
Mia O’Brien’s mother in law, Catherine Tait is looking to purchase a unit “off the plan”. She has been told that it has been a problem for many years that, in a rising market, vendors of “off the plan” sales of residential units have used the sunset clause to terminate a contract to the vendor’s advantage (i.e. the vendor can sell again for a higher price).
The changes require a vendor to give the purchaser written notice at least 28 days prior to the intended rescission. The notice must state why the vendor is intending to rescind and give the reasons for the delay.
To make it even harder for the vendor, if the lot has not been created before the sunset date, the vendor can only rescind if:
- the purchaser gives written consent to the proposed rescission (which is not likely to happen if the unit has increased in value), or
- it obtains an order from the Supreme Court allowing the rescission, or
- the reason comes with a prescribed category pursuant to the Regulations.
The Court will be very slow to allow a rescission, particularly where the property has increased in value or the vendor’s intended rescission is unreasonable and/or done in bad faith.
The changes have been in place since 2 November 2015. This if of course great protection for new property buyers!
|Catherine is understandably reassured by the knowledge that she has this protection if she proceeds with the purchase of “off the plan” unit.|
Contact a member of our Property Law Team for legal advice and assistance.