The section has been introduced to protect purchasers buying off the plan properties which are yet to be constructed or registered into an individual lot. Over the last year, there have been numerous reports of developers delaying the completion of a Contract in order to hit the sunset date, and use it as a excuse to rescind and pull out of the Contract. In some situations, the lot is then re-listed for a higher price.
The new laws now puts the onus of proof on the developer to explain the reason for any delays in works before rescinded a Contract. They are effective from 2 November 2015 and will take place regardless of when the Contract was entered into.
A vendor, may now rescind a Contract by serving notice on the purchaser or their legal representative of their intention to rescind. This notice must be served at least 28 days prior to the proposed rescission date. Should a purchaser agree to the rescission request, they must do so in writing.
If a purchaser is not agreeable to the rescission, the vendor must seek orders from the Supreme Court to allow them to . The Supreme Court will take into account numerous factors before making an order, the most important including:-
- The terms of the Contract.
- Whether the vendor has acted unreasonably or in bad faith.
- The reason for the delay in creating the subject lot.
- The likely date on which the subject lot will be created.
- Whether the subject lot has increased in value.
- The effect of the rescission on the purchaser.
The vendor will be liable to pay the purchasers’ costs in relation to the court proceedings provided the purchaser has not withheld consent unreasonably.
In addition to this, a Contract can no longer automatically rescind itself once certain conditions are met.
The changes affect all off-the-plan contracts. If you are looking to purchase property and you need to have these laws explained to you, or you are in a situation where a vendor has recently proposed to rescind the contract, please give our team at Adams & Partners a call.