The New South Wales state government has taken the next step in preventing buyers from being left high and dry by sunset clauses in off the plan property purchase agreements.
Earlier this month, NSW Minister for Innovation and Better Regulation Victor Dominello signalled that sunset clauses were one of a number of issues surrounding off the plan agreements that he planned to address
Sunset clauses in off the plan agreements allow the developer or buyer to cancel the contract if work is significantly delayed; however there are fears currently that developers are deliberately delaying work to cash in on capital growth.
Dominello yesterday announced that the NSW Fair Trading office is holding a period of public consultation about possible changes to the Conveyancing Act 1919.
"There is growing concern about the way sunset clauses are being used to rescind off the plan contracts,” Dominello said.
“With buying off the plan becoming more and more common, particularly for new strata schemes, this is something we need to look at closely.”
The government is considering two possible changes to the act.
The first would allow only the buyer to use a sunset clause to rescind a contract, while the second would allow developers to utilise the clauses, but they would then be required to pay the original purchaser a sum equal to the difference on the sale price between the two contracts.
Stakeholders are encouraged to provide feedback through an online survey by Wednesday 14 October available at www.fairtrading.nsw.gov.au
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