Major legal changes for anyone considering buying an off-the-plan property

6-December-2019 Commercial Disputes Property By Jamal Bakalian

Santa’s not the only thing coming to town this December…

From 1 December 2019, major changes to conveyancing legislation[1] will affect all parties involved in the purchase of off-the-plan properties.

Back in 2015 the Australian government introduced some safeguards to the buying and building of off-the-plan properties in response to concerns from the community about the protection of purchasers who were buying these properties.

By November 2018, the government approved the Conveyancing Legislation (Amendment) Act 2019 to make way for further changes that will protect purchasers even more. This year the government has taken these changes several steps further as the following safeguards for off-the-plan purchasers will now be in place for all contracts exchanged on or after 1 December 2019:

  • Vendors are now required to disclose crucial information about the development of the property before a contract is signed by a prospective purchaser.
    • A mandatory disclosure statement now must be given to purchasers containing information about sunset dates and attaching the following key documents: a copy of the proposed plan and details of any easements and / or covenants, a copy of the by-laws (for strata and community properties), and a schedule of finishes.
  • Developers must notify purchasers of changes to any ‘material particular’ during the development.
    • Examples of changes that now must be disclosed are any changes to the size of the lot or the internal layout of the unit, along with anything that may negatively impact the purchaser’s use and enjoyment of the property.
  • Purchasers can now rescind (withdraw without penalty) the contract if they are significantly prejudiced by a change to a ‘material particular’ (see above).
    • If the change to the property is something that would have prevented the purchaser from first entering into the contract, the legislation now permits the purchaser to rescind the contract.
    • The Act also allows the purchaser in this situation to make a claim for compensation from the developer but continue with the transaction. There will be regulations[2] put in place to support this provision under the Act[3].
  • Developers are required to provide the purchaser with a copy of the final, registered plan at least 21 days before settlement. Prior to this, the time frame stipulated was always at the discretion of the Vendor when drafting the contract and was not otherwise regulated.
  • The government has introduced stronger sunset clause protections so that the effect of the sunset clause[4] now captures additional events that trigger the termination of the contract.
    • Among the changes that the government introduced in December 2015 were the introduction of laws that prevented developers from using sunset clauses to end contracts without an order from the Supreme Court (unless the purchaser agreed).
  • The usual cooling off period is extended from 5 business days to 10 business days for both off-the-plan contracts and contracts relating to already-built residential property
  • The Purchaser’s deposit must be held in a controlled money or trust account.                                                                                                                                                                                                                                                  

Why are these changes taking place?

The changes to the legislation are to protect purchasers in the community who were feeling increasingly vulnerable in off-the-plan transactions. The legislation now creates a more transparent contract by setting minimum standards that developers must comply with. Purchasers now have greater protection as there are statutory remedies they can turn to if something goes terribly wrong and the final property does not reflect what they were promised.

Who is affected?

All parties involved in off-the-plan purchases will be impacted by these changes.

However, in relation to the disclosure of documents (see above), this does not apply to contracts that arise from option deeds that were exchanged before the commencement of these changes.

You will be pleased to know that the changes to the sunset clause laws will apply to all off-the-plan contracts, regardless of whether they were signed before or after the commencement of these changes.

Changes to the cooling off laws (see above) will affect the purchase of all residential property not just off-the-plan purchases.

Can Vendors Contract-out of these changes?

The short answer is no.

Any provision in a contract for sale of land, or any other agreement, that attempts to exclude, modify or restrict any provision of the Conveyancing Act 1919 No 6, including the changes that have been made by both the Conveyancing (Sale of Land) Amendment Regulation 2019 and Conveyancing Legislation (Amendment) Act 2018, is void.

Therefore, developers are being encouraged to recall any contracts for lots in unsold developments as at 1 December 2019, which contain clauses that try to exclude, modify or restrict any provision of the Conveyancing Act 1919 No 2 and the changes to that Act. They are encouraged to reissue new contracts which comply with the legislative changes.

[1] Conveyancing Legislation (Amendment) Act 2018

[2] Conveyancing (Sale of Land) Amendment Regulation 2019

[3] Conveyancing Legislation (Amendment) Act 2018

[4] Sunset clauses are terms of a contract that allow either party to terminate an off-the-plan contract if a specific event does not occur by a specified date (e.g. the registration of a strata plan).

Call Streeterlaw today for help to understand how these changes impact your unique circumstances…

If you are a purchaser of an off-the-plan contract and would like to speak to a knowledgeable professional about these changes, reach out to one of the Solicitors at Streeterlaw on 8197 0105 to discover how we can best safeguard your needs.

Likewise, we invite developers to contact Streeterlaw’s Strata Legal Solutions to discuss how these changes to the legislation impact them and to discuss potentially reissuing contracts for any unsold lots as at 1 December 2019. Call 8197 0105 for our expert assistance.


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Written by Jamal Bakalian

Jamal Bakalian

After studying a double degree in Law and International & Global Studies at Sydney University, Jamal completed her GDLP at the College of Law. She is currently undertaking her Masters of Law (majoring in Commercial Litigation). Jamal has been practicing Law for 5 years. With a passion for resolving disputes, Jamal is a valuable member of the Commercial Litigation team at Streeterlaw.

Call us on 02 8197 0105 to book an appointment with Jamal Bakalian!

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