Off the Plan Changes

On 1 December 2019, the amendments to the Conveyancing Act 1919 will be implemented by the Government.  The amendment will change 66ZL of the Conveyancing Act 1919 in relation to the sale of off the plan properties.

The changes can be summarised as follows:-

  • A Contract for the Sale and Purchase of Land must include a mandatory disclosure document.  The Government has continued its love affair with consumer information as a means of dealing with consumer problems.  What will happen in practice is that, like retail leases, retirement villages and franchises, a new disclosure document will be included in the off the plan Contract.   This will increase the size of the Contract enormously.
  • The amendments will require the following to be additionally added to the Contract:-
  • The proposed Strata Plan or Deposited Plan;
  • Proposed floor plans; and
  • Proposed finishes and inclusions.
  • There will be a ten (10) day cooling off period for all off the plan properties.  Such a cooling off period will not be able to be waived with a Section 66W Certificate.
  • If a developer alters the plan within the Contract, they will be required to provide a notification of the alteration to the prospective purchaser.
  • Where this notification demonstrates that the plans have been changed which are “materially prejudicial” to the purchaser, the purchaser can rescind their Contract with no penalty.  The amendments also permit the purchaser to not rescind the Contract and sue for damages against the developer.

There are fundamental changes to what occurs currently in practice is: the additional mandatory off the plan statement; the ten (10) day cooling off period; and the ability to rescind a Contract if it is “materially prejudicial”.  

“Materially prejudicial” is not clearly defined.  It is suggested that, floor plans which demonstrate a smaller site to be sold or where major alterations occur, this is materially prejudicial.  Notwithstanding these comments, it will be one left judicial interpretation and may leave Solicitors and Conveyancers floundering about what is the true meaning.

We should never ask Government to propose legislation that enhances the process of the possibilities of litigation.  Nonetheless, we can not feel sorry for the Developers.  Leverage has experience of a number of property sales where Developers have altered what the purchasers actually purchased.  Another Solicitor indicated to me the other day that, purchasing off the plan is not a good idea because you never know what you are buying.  A “gung- ho” approach of Developers to purchasers has only led to this legislation.  One finds it difficult to feel sorry for Developers in respect of this legislation.  They have abused the purchasers without consideration and now find themselves in the position where none of their contracts are certain.

As a last note, this only applies to Contracts exchanged after 1 December.  For you people who run an agency, all the Contracts you hold in your office for sale will need to be altered after 1 December.  You will need to hold new Contracts for all your developments.  For those consumers or developers who have considered a Contract that is not yet exchanged, new Contracts will have to be issued after 1 December 2019.

This article was written by Bailey Compton, Principal Solicitor & Director at Leverage Group.

Get in touch with Bailey:

1300 438 538