Your off-the-plan contract may not give the seller the rescission rights it says

What you need to know

• From 23 August 2018, sellers can only rescind residential off-the-plan contracts when:
  - a plan has not registered before a stated "sunset" date; or
  - an occupancy permit has not issued before a stated "sunset" date,
  with the buyer's written consent or a Supreme Court order permitting the rescission.
  This is the case regardless of what the contract provides or when the contract was entered into.
• Sunset clauses in new residential off the plan contracts will also need to include specific statements detailing the seller's obligation to give notice of a proposed rescission under a sunset clause and the buyer's rights. The laws requiring contract changes will be implemented no later than 1 March 2020.

What you need to do

• Ensure that any rescission on or after 23 August 2018 under a residential off-the-plan contract is valid.
• Be in a position to include new statements in sunset clauses in your standard residential off the plan contracts - describing the seller's obligation to give notice of a proposed rescission, the buyer's right to consent to the proposed rescission (or not) and the seller's right to apply to the Supreme Court for an order permitting the rescission.

New laws prevent developers from unreasonably rescinding residential off-the-plan contracts and give buyers other protections

Seller's rescission rights under sunset clauses may not be what they say they are

Regardless of what the contract says, a seller may only rescind a residential off-the-plan contract under a sunset clause (that is, either because a plan has not registered or an occupancy permit not issued before a stated sunset date) if the seller has either the buyer's written consent or a Supreme Court order permitting the rescission. The new laws apply to all residential off-the-plan contracts regardless of when they were entered into. The restrictions and the dates they apply are set out in the following table:

Similar legislation was introduced in NSW in November 2015.

More buyer protections

Other amendments to be implemented no later than 1 March 2020:

• require residential off-the-plan contracts to include specific statements about the seller's obligation to give the buyer notice of the proposed rescission, the buyer's right to give consent to the rescission, the seller's right to apply to the Supreme Court for an order permitting the seller to rescind and the Supreme Court's power to order the rescission if just and equitable ;
• strengthen the offence of concealing material facts about a property, and enable guidelines to help sellers and agents to understand what a material fact is likely to be;
• introduce protections for people who purchase options to buy land as part of land banking schemes, including requiring money paid for options to be held in a trust; and
• prohibit certain terms contracts and rent-to-buy arrangements, with significant fines and potential jail time for sellers and third-party intermediaries to act as a strong deterrent.

Other changes

Public auctions of land before 1:00pm on ANZAC Day will be prohibited.

Authors:  Jason Cornwall-Jones, Partner; Gaby Stach, Senior Associate; Anna Burnett, Senior Expertise Lawyer