Proposed Amendments to Regulations for “Off the Plan” Conveyancing Contracts

Previous amendments to regulations have included:

1. 2015 New South Wales amendment preventing developers from using “sunset clauses” to rescind contracts without obtaining an order from the Supreme Court;
2. 2019 amendments including extending the cooling off period to 10 days, and requiring deposit and other payments to be held in a trust account until settlement; and
3. Disclosure statements were also adopted, requiring key information to be provided to purchasers. Developers were required to notify changes adversely affecting use or enjoyment of the property. Breaches potentially entitle purchasers to rescind the contract. Developers were also required to provide final copies of registered plans at least 21-days prior to settlement.

Despite this, there are still problems with the conveyancing process. For example, there is no provision in contracts allowing purchasers to rescind where developers have the ability to extend sunset dates, Purchasers can be ”locked in” to the contract indefinitely.

Future amendments to regulations are proposed as follows:

1. Expanding disclosure requirements for Developers. Providing “milestones” to purchasers such as Section 68 Approval (works beyond standard development application under Local Government Regulations), Subdivision Works Certificates (work cannot begin before this is issued), and any modification applications;
2. Expansion of “sunset events” in contracts. Presently if a sunset event does not occur by a specified date, either party can rescind the contract. Section 66ZS of the Conveyancing Act 1919 currently defines a sunset event as registration of the plan of subdivision (creation of the lot) and the issuing of the occupation certificate. Regulations to be introduced may include a certain quantity of pre-sales, the developer obtaining development approval and acquiring title to the land. Introduction of these milestones and defining them as “sunset events” would require the developer to go to the Supreme Court to rescind, if those events have not been met within the agreed timeframes. Compensation to purchasers could also be considered by the Court for contraventions; and
3. Making it easier for the removal of obsolete restrictive covenants. Many of these have also become outdated. This improvement is viewed as a way of assisting housing development as these covenants can potentially continue indefinitely and limit the ways land can be used and developed. Many are also unsuited to today’s property environment.

The New South Wales government says these reforms aim to provide purchasers with protection from these uncertainties with further clarity and fairness in contracts.

Please note you should seek legal advice prior to entry into conveyancing contracts. SWS Lawyers has a wealth of experience in relation to development, environmental and conveyancing matters. Do not hesitate to contact us if you require assistance with your legal requirements.

This article is not legal advice.  It is intended to provide commentary and general information only.  Access to this article does not entitle you to rely on it as legal advice.  You should obtain formal legal advice specific to your own situation.  Please contact us if you require advice on matters covered by this article.