At the end of last year, new laws came in to give purchasers in New South Wales added protection when purchasing off-the-plan properties.
A contract for a property being purchased off-the-plan is a contract for the sale of a residential property that has not been completed at the time the contract is entered into.
In an off-the-plan contract, there is a sunset clause. The sunset clause is a provision that provides for the contract to be cancelled if the property is not created by the sunset date. The sunset date will be noted in the contract and is the latest date by which the property must be created.
Mr Dominello, the Minister for Finance, Services and Property said it best in a recent Media Release when he said “While it works well in most cases, we’ve all heard the horror stories when things go wrong”.
In summary, the major amendments to the Conveyancing Act include:
Founding minimum disclosure standards
Prior to entering into a contract, purchasers must be provided with a disclosure statement, which includes a copy of the proposed plan, proposed by-laws (list of rules) and schedule of finishes (list of the inclusions). Penalties will apply to the vendor if a disclosure statement is not provided.
Keeping developers accountable for delivering what they promised
Purchasers must be given a copy of the final plan and a notice of any changes (if applicable), at least 21 days before they can be required to settle. Additionally, purchasers can cancel the contract or claim compensation if they are adversely affected by changes made, after which time they become entitled to a refund of the deposit paid.
Extending the cooling off period
The cooling off period under a contract for the purchase of an off-the-plan property is extended from 5 to 10 business days after the contract is entered into.
Clarifying the powers of the Supreme Court
The Supreme Court can award damages where the contract is cancelled by the vendor under a sunset clause. The Supreme Court can also make an order allowing the vendor to cancel the contract under a sunset clause, but only if the vendor proves to the court that the order is just and equitable in all the circumstances.
The changes are of significant importance when you consider that 12% of all residential property sales in NSW are off-the-plan sales.
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