The NSW Government has sought to address some concerns about residential off the plan contracts by introducing new laws to increase disclosure requirements and remedies available to Purchasers.
The Conveyancing Legislation (Amendment) Act 2018 (‘Amendment Act’) is proposed to take effect on 1 September 2019; although that date may be extended.
Some important aspects to the Amendment Act are as follows:,?p>
1. New Disclosure Statement.
The Amendment Act introduces a new section into the Conveyancing Act: s 66ZM. This section requires that residential off the plan contracts have annex a particular ‘Disclosure Statement’.
(a) The Sunset Date and whether or not it can be extended,
(b) Whether the Vendor has already obtained Development Approval,
(c) Whether the contract is conditional upon any event,
(d) the proposed lot number of the subject lot,
(e) sufficient information to identify the location of the subject lot,
(f) the area of the subject lot,
(g) if the contract relates to land that comprises or includes a lot in a proposed strata scheme—the draft floor plan and draft location plan,
(h) if the contract relates to land that comprises or includes a lot in a proposed community, precinct or neighbourhood scheme—the draft location diagram, draft detail plan and draft community, precinct or neighbourhood property plan,
(i) the site of any proposed easement, profit à prendre, restriction on the use of the land or positive covenant affecting the subject lot
(j) any proposed schedule of finishes,
(k) any instrument under section 88B of the Act that is proposed to be lodged with the draft plan,
(l) if the contract relates to land that comprises or includes a lot in a proposed strata scheme—the draft by-laws,
(m) (if applicable) the draft management statement and the draft of any proposed development contract,
(n) (if applicable) the draft strata development contract,
(o) (if applicable) the draft strata management statement,
(p) (if applicable) the draft building management statement.
If the disclosure requirements are not met, the buyer can rescind ab initio (i.e. get back their full deposit) within 14 days of exchange of contract.
2. A new requirement to notify purchasers of any changes to ‘material particulars’.
Where a change of circumstances means the disclosure statement no longer holds true, the Vendor must notify the Purchaser – provided that change relates to a ‘material particular’.
A material particular is change in the position of the disclosure statement which will, or is likely to, adversely affect the use or enjoyment of the subject lot.
The following are not material particulars:
‘(a) a change in the proposed lot number of the subject lot, and
(b) if the contract relates to land that comprises or includes a lot in a proposed strata scheme—a change in the location or area of the parking and storage area, but only if the change is made in accordance with the terms of the contract.’
3. New remedy for a change to material particulars.
A purchaser can rescind the contract where the change of material particular adversely affects them, and they would not have entered into the contract should such have been made known to them.
Moreover, the legislation provides an alternative remedy. The purchaser may instead elect to make a claim of up to 2% of the purchase price. The claim must either be agreed to by the Vendor, or it will be sent to arbitration.
Either remedy must be exercised within 14 days of being notified of the change.
4. Cooling off period
The new legislation extends cooling off periods to 10 business days after the date of exchange (as opposed to the standard cooling off period of 5 business days for not-off-the-plan residential purchases).
Contracts must include a warning setting out the cooling off rights.
And the new s66S(6) provides the regulations with the power to set a limit on the extent to which cooling off rights can be waived by a 66W Certificate issued by a solicitor/conveyancer.
For professional legal advice, contact Maclarens Lawyers on 96823777.