This article is from the Australian Property Journal archive
THE New South Wales government declared the sun is setting on dodgy developers who terminate off the plan contracts for financial gain.
Minister for Innovation and Better Regulation Victor Dominello said new laws introduced this month will force developers to justify any sunset clause termination of an off the plan sale.
This follows reported cases of developers looking to take advantage of rising house prices by terminating existing off the plan contracts with buyers and reselling the same property for a higher value.
“Some NSW consumers have reportedly had their contracts rescinded by a developer using the sunset clause, only for the land or apartment to be re-sold the same day for a higher price.
“The NSW Government has listened to the concerns of its citizens and is taking action. We are committed to ensuring certainty in the property market and to protecting the rights of those who purchase off the plan properties,” Dominello said.
“The NSW Government is putting developers on notice that from this day forward if they use a sunset clause for no other reason than to reap a windfall profit at the expense of the purchaser – then they do so at their own peril,” he added.
Under the new laws, if a purchaser does not give their consent, then a developer will be required to apply to the Supreme Court for leave before any termination can take effect.
The proposed legislation will apply not only to contracts made after the law comes into effect, but will also apply to contracts that are still in operation.
The new law has been welcomed by the Urban Development Institute of Australia (UDIA) NSW.
UDIA CEO Stephen Albin said it is critical for the future of the industry and the developers doing the right thing that the rogue operators are stamped out.
“We are pleased to see the Minister has been swift in his efforts to close this loophole as the behaviour of a few unethical developers needs to be stopped.
“While we are broadly supportive of the initiative, the devil will be in the detail so we will be taking a close look at the legislation when it is available,” he added.
Albin said 639 submissions were received during the recent public consultation period, which represents only 2.3% of dwellings completed over the past year of available government data.
“With only 639 complaints out of around 27,350 new houses that were developed over the past year, the issue is clearly occurring on the fringes of the industry.
“It is critical that business dealings within the industry continue to be conducted in good faith and with integrity,” he concluded.
Australian Property Journal
