There has been new Legislation introduced, the Conveyancing Amendment (Sunset Clauses) Act 2015 which was effective as of 17 November 2015.
The new legislation applies to Vendors rescinding under “Sunset Dates” in off-the-plan contracts for residential property.
What you now need to do to rescind under a Sunset Clause
Previously, if a Sunset Date expired, all that you were required to do to rescind the Contract was issue a Notice of Rescission to the purchaser.
Now, the new legislation provides that a vendor must meet the below two requirements if they wish to rescind a contract after the expiry of a Sunset Clause:
- The vendor must give the purchaser notice in writing at least 28 days before the proposed rescission; and
- The notice must state why the vendor is rescinding, including outlining the reasons for the delay in being able to meet the Sunset Date.
When are you allowed to rescind?
A vendor can now only rescind in the following circumstances:
- When the purchaser gives written consent to the rescission; or
- If the purchaser does not consent, then the vendor will need to obtain an order from the Supreme Court of NSW permitting the rescission. The Court will only make the orders if they consider it “just and equitable”. The following factors are considered by the Court in determining what is “just and equitable”:
- the terms of the off-the-plan contract;
- whether the vendor has acted reasonably or in bad faith;
- the reason for the delay in creating the subject lot;
- whether the subject lot has increased in value;
- the effect of the rescission on the purchaser; and
- any other matter the Court considers relevant or are prescribed by the Regulations.
The vendor is liable to pay the costs of a purchaser in relation to the proceedings unless the vendor can show that the purchaser unreasonably withheld its consent.
- The reason for the rescission falls within a category of reasons as prescribed by the regulations. Those reasons are yet to be set out in the regulations.
For more information on the changes and how they might affect you, please contact our office and speak with our Property Division. www.gavelpage.com.au