You save the money for the deposit, you have looked at the plans and decided this is the right purchase for you, you eagerly await the building of your new property and being handed the keys. However, the reality of this is that off-the-plan purchases do not always run as smoothly as Purchasers would hope.
The proposed introduction of new laws to NSW Parliament this year are aimed at addressing the inequality Purchasers have faced in the bargaining process with Developers previously when buying off-the-plan. These new laws aim to provide a greater level of protection for off-the-plan purchasers and in turn will provide a greater level of surety for prospective Purchasers.
Changes that are expected to be introduced to better protect Purchasers include:
- Developers will be required to provide a disclosure regime which requires Developers to give more details to prospective Purchasers who are buying off-the-plan as to what it is they are indeed purchasing.
- Developers are to provide prospective Purchasers with a Disclosure Statement setting out a copy of the proposed plans including details of easements and covenants, copies of any Strata By-Laws and a Schedule of Finishes detailing what the Purchaser is to receive.
- The Developer will be required to notify the Purchaser of any changes made during the development. If the Purchaser is impacted by the change, the Purchaser will have the ability to rescind the contract or in the alternative the Purchaser will have a right to claim compensation if they are impacted by a change that differs to what was previously disclosed.
- The extension of greater protections provided through the widening of the scope of Sunset Clauses contained within off-the-plan purchases.
This is being brought about due to Developers in the past purposely delaying the registration of plans beyond the Sunset dates provided in the Contract for Sale. This would then allow for them to rescind the Purchaser’s contract and resell the property at a now much higher price. The consequence of this being Purchasers who have waited years for their Property to be built are now without the Property they agreed to purchase and are in turn now left to face a very different market to the one they entered years prior.
The proposed changes to section 66ZL of the Conveyancing Act 1919 NSW operate to provide a greater degree of restriction and accountability for Developers when invoking Sunset Clauses. In doing so it is hoped that this will provide for greater clarification as to the operation and purpose of section 66ZL of the Conveyancing Act 1919 NSW and its ability to limit the circumstances in which the Developer may rescind the Contract for Sale and the protections that this offers Purchasers. This includes clarification as to the scope of section 66ZL of the Conveyancing Act 1919 NSW including addressing previous loopholes where Developers have sought to frustrate the operation of section 66ZL Conveyancing Act 1919 NSW and the widening of the Courts powers to award damages for material changes under the Section.
- Cooling off periods for off-the-plan Purchasers will be extended from 5 business days to 10 business days.
The purpose of these measures is to ensure that the Property the Purchaser has agreed to buy ends up being what they have agreed to. That is, two bedrooms, one bathroom and timber floors they had first decided on.
With the introduction of these changes it is hoped that in the future Purchasers can buy off-the-plan with a greater degree of confidence and security than what they have previously.
For more information on the above, please contact Peter Crittenden or Ben Wong on (02) 4626 5077.
The contents of this publication are for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Specific legal advice should always be sought separately before taking any action based on this publication.