The NSW Government recently conducted a review of the law surrounding off-the-plan contracts. As a result, and effective 1 December 2019, new legislation has been introduced imposing greater transparency and disclosure obligations for developers and stronger protections for buyers.
These law changes will be a welcome relief for those considering future off-the-plan residential investments.
This method of sale has been a popular way for buyers to enter the property market for long while. By paying the deposit once contracts have been exchanged to commit to the purchase, buyers often have several years before full payment is due post construction completion and registration.
The risk for purchasers is they are unable to physically inspect an off-the-plan property before entering into a contract, so they must rely on written information provided by the developer.
Key changes to legislation include:
- Vendors must give buyers key information about the development, including copies of the proposed plan, proposed by-laws and a schedule of finishes before contracts are signed.
- Vendors must notify purchasers of material changes to what was disclosed.
- Buyers are allowed to end the contract or claim compensation in some cases if they are materially impacted by changes made from what was disclosed.
- Vendors must provide a copy of the final plan at least 21 days before the buyer can be compelled to settle.
- Existing legislation was widened to clarify that the Supreme Court can award damages where the vendor terminates under a sunset clause.
- The cooling-off period was extended to 10 business days, with any deposit to be held in a trust or controlled account until settlement.
For more information including new approved forms, visit the Off-the-plan page on the Office of the Registrar General’s website.