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Sale of Land Amendment Bill 2018

By Dallas Sather


Off-the-plan contracts usually contain a sunset clause provision that permits either the developer or purchaser to end the contract if the subdivision plan is not registered; or an occupancy permit is not issued by a specified date.

Some developers had been taking advantage of these clauses by intentionally delaying the registration of the plan of subdivision so that signed contracts could be terminated, and the property could be re-sold for a more expensive price.

If the Bill is passed, in its current form, a vendor will be unable to rescind an off-the-plan contract, pursuant to a sunset clause, unless ordered by the Supreme Court or by the purchaser through written consent.


Obtaining Written Consent


In seeking the purchaser’s written consent, the vendor will need to provide a notice setting out-

a) The reason why the vendor proposes to rescind the contract; and

b) The reason for the delay in the registration of the plan of subdivision or the issuing of the occupancy permit.

The vendor must provide the purchaser with 28 days to respond to the notice.


Order by the Supreme Court


If the purchaser does not provide written consent, the vendor may seek an order from the Supreme Court. The Bill lists a number of requirements that the Court is to take into account, in determining if such an order should be made, including:

· the terms of the contract;

· whether the vendor has acted unreasonably or in bad faith;

· the reasons for the delay;

· the likely date the plan of subdivision will be registered or occupancy permit will be issued;

· whether the subject lot has increased in value;

· the effect of the rescission on the purchaser; and

· Any other matter that the Court considers relevant.

If the Court makes an order, the court may make other orders it considers fair, including compensation to the purchaser.

The vendor will be liable to pay the costs of the purchaser, unless the vendor satisfies the court that the purchaser unreasonably withheld consent to rescind the contract.

It is important that the changes will apply to all existing off-the-plan contracts.


Conclusion


This much needed amendment to the Sale of Land Act strikes a great balance between protecting the interests of vulnerable purchasers who would otherwise miss out on an increase in the value of the Lot, while still providing the Vendor with a recourse to end the contract, if they are not in a position to complete the plan of subdivision.

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