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Off the plan purchase, property lawyer, conveyancer, Shire Legal, Miranda, Sutherland Shire, Sydney CBD

Off the Plan Contract Reforms

conveyancing off-the-plan property purchasing property selling property Oct 30, 2019

New laws are expected to come into force on 1 December 2019 when the Conveyancing Legislation (Amendment) Act 2018 and Conveyancing (Sale of Land) Amendment Regulation 2019 commence.

These impose further disclosure requirements on vendors selling off the plan properties and provide new remedies and stronger protections to purchasers.

“Off the Plan” is the term used when selling a residential lot that has not been created at the time you sign the Contract.  You are purchasing the lot based on a draft plan which is yet to be registered at NSW Land Registry Services.

So how do these new laws change the current requirements?

Disclosure Statement

Vendors will be required to attach a Disclosure Statement to Off the Plan Contracts.  These must include the following draft documents, however if they are already attached to the contract they do not need to be attached twice:

  • a draft plan, prepared by a registered surveyor;
  • any s88B instrument proposed to be lodged with the plan
  • for lots in a proposed strata scheme, the draft by-laws
  • for lots in a proposed community, precinct or neighbourhood scheme, the draft management statement and the draft of any proposed development contract
  • for land that comprises or includes a lot in a proposed development scheme, the draft strata development contract
  • for lots in a proposed strata scheme that relates to a part strata parcel, a draft strata management statement required under section 99 of the Strata Schemes Development Act 2015 for the registration of the strata plan,
  • for land that will be subject to a building management statement under Division 3B of Part 23 of the Conveyancing Act 1919, the draft building management statement.

Failure to attach the required documents will give purchasers the right to rescind the contract within 14 days from the date of exchange.

Vendors will also be required to advise of any changes to “material particulars” disclosed in the above documents that will adversely affect the use or enjoyment of the lot being sold. Failure to advise of any such change may give the purchaser the right to rescind or claim compensation.

10 Business Day cooling off period

The cooling off period has been extended from the standard 5 business days to 10 business days but only if the property is an “off the plan” residential purchase.  Contracts for the purchase of existing residential dwellings will still only have the benefit of the standard 5 business days.

A new updated warning notice relating to cooling off periods must be included in Off the Plan Contracts from 1 December 2019.  There is a 6 month transition period for Contracts for existing residential property and from 1 June 2020 the new warning notice must be included in ALL contracts.

Purchasers to receive registered plans 21 days before

Under the new laws the vendor must provide the purchaser with copies of the registered plans and all associated documents at least 21 days before settlement.  The purchaser does not have to settle any earlier than 21 days after receiving the said documents.

If the registered plans reveal an inaccuracy in a material particular that the vendor did not disclose then the purchaser may still have the right to rescind the contract or claim compensation within 14 days from receipt of the documents.

Deposit to be held in trust

Deposits can no longer be held by the vendor and can only be held in a trust account or controlled money account.  This provides protection in the event the developer is found to be insolvent.

Sunset clauses

Vendors will be required to obtain an order from the court allowing termination of the contract under a sunset clause where the event that triggers the termination is something other than registration of the plans, such as the provision of an occupation certificate.

The courts may also award damages to purchasers in the event that a vendor is permitted to terminate a Contract under a sunset clause.

Contact the Shire Legal team if you have any questions.

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