Given some recent cases and media around the abuse of sunset dates by some developers, changes to the laws around off-the-plan contracts certainly isn’t unexpected.
The Conveyancing Legislation Amendment Act 2018 No 75 (NSW) was assented to on 22 November 2018 and is set to provide better protections for purchasers of off-the-plan properties. While we are still awaiting the commencement date to be set by proclamation, it is safe to say changes are on the way.
The Act amends the Conveyancing Act 1919 and the Real Property Act 1900 to introduce further vendor disclosure requirements for off-the-plan contracts and to support the transition to electronic conveyancing.
Further details are yet to be prescribed by the regulations, however the key changes set out in the Act include:
1. New vendor disclosure obligations, which includes the requirement for vendors to attach a disclosure statement to the contract. The disclosure statement must include a draft plan prepared by a registered surveyor, and other documents which will be detailed in the regulations. The regulations will also set out the remedies available to purchasers where a vendor has failed to comply with its disclosure obligations.
2. A requirement that vendors notify purchasers at least 21 days before settlement upon becoming aware that the disclosure statement is or has become inaccurate to a material particular. This might include a change to the draft plan or fittings and finishes that is likely to adversely affect the use or enjoyment of the lot.
3. A purchaser will have the right to rescind the contract if a change is such that the purchaser:
(a) would not have entered into the contract had the purchaser been aware of the change, and
(b) would be materially prejudiced by the change
4. Vendors must serve purchasers with a copy of the registered plan and any other document registered with the plan and purchasers will not be required to settle their purchase earlier than 21 days of receipt of these documents.
5. Vendors will be required to obtain the consent of the purchaser(s) in order to rescind the contract following the expiry of the sunset date (the date by which the plan is to be registered and occupation certificate issued). If the purchaser refuses to provide such consent the vendor will be required to obtain an order of the Supreme Court before it can rescind the contract.
6. The cooling off period is extended from 5 to 10 business days.
7. Provision for electronic documents and signing to better reflect modern conveyancing processes.
Some may view the changes as yet another burden on developers. However, on the positive side these changes may be just what is needed to bring greater confidence and growth to a slowing market.