Striking a balance - changes to off-the-plan contracts in NSW
Following the discussion paper “Off-the-plan contracts for residential property” released by the NSW Office of the Registrar General in November 2017, the NSW Government has introduced and assented to the Conveyancing Legislation Amendment Bill 2018. The (now) Conveyancing Legislation Amendment Act 2018 No 75 (NSW) introduces new protections for purchasers buying off-the-plan and brings the legal framework up to speed with the shift to electronic conveyancing. The commencement date of the Act is still to be set by proclamation.
The changes introduced by the Conveyancing Legislation Amendment Act 2018 No 75 (NSW) include:
- A new vendor disclosure regime, which includes the requirement for vendors to attach a disclosure statement to the contract. Aside from a copy of a draft plan prepared by a registered surveyor, the information and documents which are to be detailed or attached to the disclosure statement are not yet known as they are yet to be prescribed by the regulations but are expected to include the proposed by-laws and a schedule of finishes. The regulations will also determine the remedies and relief available to purchasers where a vendor fails or refuses to comply with the requirement.
Vendors will also be required to:
Notify purchasers upon becoming aware that the disclosure statement was inaccurate (at the time of signing) or has become inaccurate to a material particular. This might include a change to the draft plan or a change to the schedule of finishes that is likely to adversely affect the use or enjoyment of the lot.
The purchaser must be informed of the change at least 21 days before completion. In some instances this change will give the purchaser a right to rescind.
- Serve purchasers with a copy of the registered plan and any other document registered with the plan. Purchasers will not be required to complete the contract earlier than 21 days of receipt of the documents.
- The tightening of regulations surrounding the vendor’s right to rescind under sunset clauses. Vendors will soon be required to obtain the consent of each purchaser under the contract in order to rescind following the expiry of the date by which the strata plan (and creation of the lot) and issue of the occupation certificate are to issue (the sunset date). If the purchaser refuses to provide its consent, the vendor will be required (unless the regulations stipulate otherwise) to obtain an order of the Supreme Court permitting the vendor to rescind.
- An extension to the cooling off period to 10 business days (currently 5 business days).
- Modernising the conveyancing process to allow for contracts, instruments and deeds to be formed and signed electronically.
It is not surprising that the NSW Government has introduced such protectionist changes, particularly given the media attention surrounding the use of sunset clauses by vendors. Hopefully these changes will also lead to greater confidence and growth in the industry.
If you have any questions about purchasing off-the-plan, please get in touch with our Property Team.