New law now in place to protect off-the-plan purchases: ACT government

Buyers who purchase an off-the-plan property will now be protected from sunset and development-delay clauses thanks to a new law that was passed in the Legislative Assembly on Wednesday.

The Civil Law (Sale of Residential Property) Amendment Bill 2021 was tabled in November following mounting complaints from buyers whose off-the-plan contracts were rescinded earlier this year.

A sunset clause or development clause is a term that allows developers to revoke a contract if certain time frames are not met, leaving many buyers at risk and out of pocket.

Under the new legislation, developers will be able to act on the clauses to rescind a contract only if the buyer consents or if they’re permitted by an order of the ACT Supreme Court.

The developer must give 28 days written notice to the buyer and must disclose why the contract should be revoked. If the buyer does not agree, the developer may seek an order from the Supreme Court sanctioning the recission.

Should the developer seek an order from the Supreme Court, the court will take into account the impact that the revoked contract will have on both the buyer and seller. The developer will be liable to pay costs to the buyer unless the buyer had unreasonably withheld their consent.

“The recent trend of developers rescinding contracts has led to great personal distress for some buyers, as well as undermining confidence in the off-the-plan property purchase market,” said ACT Attorney-General Shane Rattenbury.

“The housing market is already stressful for buyers, and it is often first-home buyers who are looking at off-the-plan purchases. It was important to act swiftly to address these concerns and protect consumers from rescissions occurring in bad faith.”

While the legislation was proposed only in November, it has been in effect since November 9 in a bid to “protect buyers and prevent opportunistic rescissions” between introduction and the passing of the amendments, Mr Rattenbury added.