19 September, 2018
Victorian Bill to retrospectively restrict seller's rescission rights under residential off-the-plan contracts
What you need to know
A Bill restricting seller's rescission rights under existing and new residential off-the-plan contracts is before the Victorian parliament.
If passed, from 23 August 2018, sellers will only be able to rescind residential off-the-plan contracts when:
- a plan has not registered before a stated "sunset" date; or
- an occupancy permit has not issued before a stated "sunset" date,
- with the buyer's consent or a Supreme Court order permitting the rescission.
What you need to do
Keep an eye out for our advice about the Bill's passage through the Victorian parliament.
If the Bill passes, ensure that a seller's rescission on or after 23 August 2018 under an off-the-plan contract is valid.
New Bill to prevent sellers from unreasonably rescinding residential off-the-plan contracts and give buyers other protections
Seller's rescission rights under sunset clauses may not be what they say they are
The Bill provides that regardless of what the contract says, a seller may only rescind a residential off-the-plan contract under a sunset clause (that is, either because a plan has not registered or an occupancy permit not issued before a stated sunset date) if the seller has either the buyer's written consent or a Supreme Court order permitting the rescission. If passed in its current form, the Bill will apply to all residential off-the-plan contracts regardless of when they were entered into. The restrictions and the dates they apply are set out in the following table:
Please click on the image to enlarge.
Similar legislation was introduced in NSW in November 2015.
More buyer protections
The Bill also proposes to:
- require residential off-the-plan contracts to include specific statements about the seller's rights to rescind under a sunset clause;
- strengthen the offence of concealing material facts about a property, and enable guidelines to help sellers and agents to understand what a material fact is likely to be;
- introduce protections for people who purchase options to buy land as part of land banking schemes, including requiring money paid for options to be held in a trust; and
- prohibit certain terms contracts and rent-to-buy arrangements, with significant fines and potential jail time for sellers and third-party intermediaries to act as a strong deterrent.
Other changes
Public auctions of land before 1:00pm on ANZAC Day will be prohibited.
For further information, please contact:
Jason Cornwall-Jones, Partner, Ashurst
jason.cornwall-jones@ashurst.com
