New Vendor Disclosure Requirements for Off the Plan Purchases

Posted on Dec 19, 2019 by Liam Tobin   |   Categories: Property & Conveyancing

The first day of December 2019 heralded not only the start of summer, but also a more
sunny environment for purchasers of residential lots in off-the-plan contracts.

From 1 December 2019 the Conveyancing Legislation Amendment Act 2018 (NSW) and
Conveyancing (Sale of Land) Amendment Regulation 2019 (NSW) came into effect,
imposing more extensive obligations on Vendors to disclose information to purchasers in off-
the-plan property contracts, and providing purchasers with increased protections and
remedies, as well as more information and clarity through the disclosure process.

Vendors will now be obligated to provide a disclosure statement which sets out key
information such as sunset dates; penalties for delay in completion; the progress of
development and circumstances in which the vendor may cancel the contract.

The disclosure statement must also include draft versions of additional documents as
appropriate being:-

  •  Plan prepared by a registered surveyor and showing the proposed lot number, area,
    and location, as well as plans of strata, community or other schemes;
  • s88B instrument to be lodged
  • Schedule of finishes
  • Strata By-Laws
  • Strata development contract
  • Community/precinct/neighbourhood management statement
  • Community/precinct/neighbourhood development contract
  • Strata management statement
  • Building management statement.

Where documents are included in the contract, the documents are considered to be attached
to the disclosure statement.

In the event that during the development, the details are changed from those that were
disclosed in a way that adversely affects the use or enjoyment of the lot being sold, the
vendor will be required to notify the purchaser.

This applies to ‘material particulars’, and not minor matters such as changes to lot numbers
or street names, or the location of storage and parking areas in a strata scheme.

In the event that a material particular has changed in such a way that a purchaser is able to
show that they would not have entered into the contract had they been aware of change, or
that they are materially prejudiced, purchasers may be able to rescind the contract or seek
compensation of up to 2% of the purchase price.

Off-the-plan purchasers will have their deposit moneys protected, with new requirements
that deposits are held in a trust or controlled money accounts and not released to the vendor prior to settlement, ensuring that the deposit moneys are protected in the event of the vendor’s bankruptcy or liquidation.

The previous rights of purchasers are provided several extensions under the new laws. The
amendments extend the standard five business day cooling off period to ten business days
for off-the-plan contracts. Recent protections for purchasers against vendors abusing sunset
clauses are also extended, with the definition of sunset clauses widened to include other
events.

The new laws apply to contracts entered into from 1 December 2019 for off-the-plan
residential property. To discuss the impact of the changes for a potential purchaser or a
potential vendor contact Baker Love Lawyers.

 

If you need advice regarding your sale or purchase, please contact our Conveyancing & Property Law team on (02) 4944 3322