This article is from the Australian Property Journal archive
DEVELOPERS who terminate off the plan contracts and resell the same apartment will have to pay damages to the original purchaser, under proposed reforms by the New South Wales government.
The proposed changes comes after reports that developers are cashing in on Sydney’s house price boom by cancelling original contracts and reselling the same apartments for a higher price.
Under the reforms, if a developer did that, they would be required to pay damages to the original purchaser equal to the difference on the sale price between the two contracts.
Minister for Innovation and Better Regulation Victor Dominello announced a public consultation on the use of sunset clauses in off the plan property contracts.
Dominello said the NSW government was considering reforms to the Conveyancing Act 1919 including allowing only the purchaser to rescind off the plan contracts.
Sunset clauses are usually contained in contracts for buying land or strata units off the plan. They allow either the buyer or the developer to rescind a contract after a certain date, usually in the event that construction is not finished on schedule.
Dominello said the government is concerned sunset clauses are being misused.
“There is growing concern about the way sunset clauses are being used to rescind off the plan contracts.
“With buying off the plan becoming more and more common, particularly for new strata schemes, this is something we need to look at closely,” he added.
“Some NSW consumers have reportedly had their contracts rescinded by a developer using the sunset clause, only for the land or apartment to be re-sold the same day for a higher price.
“Purchasing a property is a life-changing decision and we need to ensure consumers are protected against exploitative practices,” Dominello said.
Land and Property Information (LPI) and NSW Fair Trading have commenced a public consultation. Stakeholders are encouraged to provide feedback through an online survey by Wednesday 14 October available at www.fairtrading.nsw.gov.au
Australian Property Journal
