Sydney is a hot property market, and recently purchasers were outraged when a NSW developer utilised the sunset clause in its off the plan contract to cancel the contracts and to resell the development at a higher price.
Some sunset clauses allow the purchaser or developer to rescind if the development is not completed by a particular date, known as the “sunset date”.
In one case, the developer originally sold the two-bedroom apartment for $915,000. After cancelling the contract, it was put back on the market for $1.39 million.
The NSW Government is considering reforms to the Conveyancing Act 1919 including:
- Allowing only the purchaser to rescind off the plan contracts; and
- Requiring a developer who terminates a contract under a sunset clause, and resells the same unit, to pay damages to the purchaser equal to the difference on the sale price between the two contracts.
Feedback is due by Wednesday 14 October.
We are not aware of any plans to introduce similar legislation in the ACT.
Visit finance.nsw.gov.au for more information on this topic.
For more information contact:
Stephanie Lynch — Partner — Property Projects Team
(02) 6279 4398
Sai Ranjit — Lawyer — Property Projects Team
(02) 6279 4407