New laws will affect all contracts entered into from December 1, 2019, for off-the-plan properties in NSW, writes Licenced Conveyancer, Rachel Godden.
Changes have been made to legislation Conveyancing Legislation (Amendment) Act 2018 and Conveyancing (Sale of Land) Amendment Regulation 2019. From December 1, 2019, Vendors will have extra disclosure obligations to give purchasers stronger protection when buying property off-the-plan. If you are buying a property in NSW, it is critical you seek the help of an experienced lawyer to ensure the Vendor adheres to their new legal obligations.
In summary, new laws for off-the-plan purchasing will require:
- New disclosure requirements: Disclosure Statement and draft documents to be attached to the contract
- Vendors to notify changes to ‘material particulars’
- Purchasers can rescind or claim compensation for some changes to material particulars
- 10-Business-Day cooling-off period for off-the-plan contracts
- Purchaser to be given registered plans 21 days before settlement
- Deposit to be held in trust
Vendors will be required to attach a Disclosure Statement to the contract that provides
- Key information including sunset dates and conditions
- A copy of the draft plan prepared by a registered surveyor including proposed lot numbering, area, parking and storage area
- Proposed easements, restrictions or positive covenants 88B instruments; draft by-laws affecting the property
If the Disclosure Statement and statutory documents are not attached to the contract. the purchaser has 14 days from the date of the contract to rescind.
Vendors to notify changes to ‘material particulars
A Vendor must notify a purchaser of any changes made that will adversely affect the use or enjoyment of the lot including 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
- A development contract or strata development contract.
Purchasers can rescind or claim compensation for some changes to material particulars
A purchaser must show that they would not have entered into the proposed contract and that they are materially prejudiced by the changes to be able to rescind the contract. Rather than rescinding the contract, the purchaser may claim compensation (up to 2% of the purchase price) for the change. A purchaser must within 14 days of being notified of the change of material particular, exercise their rights to either rescind or claim compensation.
10-Business-Day cooling-off period for off-the-plan contracts
The cooling-off period for an off the plan contract will be extended from 5 to 10 business days.
Purchaser to be given 21 day settlement from registration of plan
A purchaser has 21 days to settle once they have been provided with the final registered plan and associated documents. A purchaser does not have to settle within the 21 days period.
Deposit to be held in trust
Any money paid under the contract from 1 December 2019 must be held in the stakeholder’s trust account and is not to be released to the Vendor. This is to protect the purchaser’s payment in the developer become insolvent.
Stronger sunset clause protections
The sunset clause definition will also include events such as the issuing of an occupation certificate and not just the registration of the plan. The buyer is able to rescind the contract should these events not occur by a certain date.
How Attwood Marshall Lawyers Can help
Some cheap conveyancers will invariably not be aware of the legislative changes. Get someone who is a professional and knows what they are doing to act for you, safe in the knowledge they have the experience to protect your investment. Use the Attwood Marshall Lawyers Fress Conveyancing Planner APP to plan your transaction.