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Posted 01 December 2015
On 24 November 2015, the Conveyancing Amendment (Sunset Clauses) Act 2015 (“the Act”) was assented to by the NSW Parliament and came into force. The preamble states that it is an Act “to prevent a developer from unreasonably rescinding an off the plan contract for a residential lot under a sunset clause.”
The Act has arisen in response to matters recently reported in the media where developers have used the sunset clause provision to rescind contracts, often ones exchanged many years prior, and then resell those lots for a much higher price.
A ‘sunset clause’ is a clause permitting rescission of a residential off-the-plan contract if the deposited plan or strata plan creating the lot the subject of the contract has not been registered by a certain date. It is common for off-the-plan contracts to contain a provision allowing either party to rescind if the relevant plan has not been registered by a certain future date, the ‘sunset date’.
The Act now provides that if a developer/vendor wishes to rescind a contract using the sunset clause provision, they must:
If a vendor is applying for a Supreme Court order to rescind, the Act states that the matters the court must take into account include the reason for the delay in creating the subject lot, whether the lot has increased in value and the effect of the rescission on the purchaser.
The Act also has some retrospective application, applying to all off-the-plan contracts entered into from 2 November 2015.
***The information contained in this article is general information only and not legal advice. The currency, accuracy and completeness of this article (and its contents) should be checked by obtaining independent legal advice before you take any action or otherwise rely upon its contents in any way.