Recently, there have been some changes to the Conveyancing Legislation (Amendment) Act 2018 (New South Wales) and the Conveyancing (Sale of Land) Amendment Regulation 2019 (NSW). The changes, which took effect from 1 December 2019, introduced additional vendor disclosure obligations to provide purchasers of off-the-plan contracts with greater transparency, new remedies and stronger protections.
A Disclosure Statement in the approved form must be attached to an off-the-plan contract prior to being signed by the purchaser. The Disclosure Statement must include the following:
- a copy of the draft plan prepared by a registered surveyor which shows:
- the proposed lot number and area of the subject lot and sufficient information to identify its location;
- the site of any proposed easement or profit a prendre affecting the subject lot; and
- the site of any proposed restriction on the use of land or positive covenant affecting part of the subject lot.
- any proposed Schedule of Finishes.
- any s88B instrument proposed to be lodged with the plan.
- for lots in proposed strata schemes:
- the draft floor plan and draft location plan; and
- the draft by-laws.
- for lots in proposed community, precinct or neighbourhood schemes:
- the draft location diagram, draft detail plan and draft property plan; and
- the draft management statement or 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:
- the draft management statement as required under s99 of the Strata Schemes Development Act 2015.
- 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.
The purchaser may rescind the contract within 14 days from the contract date if the vendor fails to attach a disclosure statement, or a document required to be attached to the disclosure statement.
The cooling-off period for off-the-plan contracts has been extended from 5 business days to 10 business days.
Vendor to notify changes to ‘material particulars’
There are often changes that occur during development. The vendor must notify purchases of changes that make original disclosures inaccurate in a ‘material particular’. These include changes that would adversely affect the purchaser’s use or enjoyment of the lot and include changes to:
- the draft plan;
- schedule of finishes;
- easements or covenants;
- a strata management statement or building management statement;
- a management statement for a community, precinct or neighbourhood scheme; and
- a development contract or strata development contract.
However, changes to proposed lot number or street names, changes to allocation of costs of shared expenses or changes to location or area of parking or storage areas are not considered to be ‘material particulars’.
The vendor must use the approved form to notify the purchaser of any changes of ‘material particulars’ at least 21 days before the date for completion.
Settlement Notice Period
It is common practice for vendors to require purchasers to complete the contract 14 days from the date the purchaser is notified in writing that the plan has been registered.
However, following the changes, vendors must provide purchasers with at least 21 days’ written notice from the date the plan is registered and the purchaser is provided with a copy of the registered plan and associated documents.
Purchasers Rescission or Compensation Rights
The purchaser may elect to rescind the contract if they receive a notice of change of ‘material particulars’ from the vendor or the registered documents reveal an inaccuracy in a material particular that the developer has not previously notified provided that they can prove that they are materially prejudiced by the inaccuracy and would not have entered into the contract has they been aware of the inaccuracy.
Alternatively, the purchaser may make a claim for compensation (up to 2% of the purchase price) for the change.
The purchaser must make any claim for compensation or serve a notice of rescission within 14 days from the date they are served with the notice of change of ‘material particulars’ or the registered documents.
Deposit to be held in trust
Previously, developers would request the early release of the deposit or any other instalment paid to assist in funding the project. The changes now require the deposit or any other instalment paid to be retained by the deposit holder in a trust or controlled money account. The deposit holder is not authorised to release the deposit or any other instalment paid prior to completion.
These changes have been introduced to protect the purchaser in the event the developer’s insolvency.
Stronger Sunset Clause Protections
The new laws extend the definition of a sunset clause to include other events which may trigger termination of the contract including the issuing of an occupation certificate. The purchaser may rescind the contract should these events not occur by the date stipulated in the contract.