In an attempt to provide purchasers with greater protection when buying property off-the-plan, the New South Wales Government has passed new laws regulating off-the-plan Contracts effective 1 December 2019. The new laws place additional disclosure obligations on a vendor selling property off-the-plan and provide purchasers with certain rights and remedies for failure to comply with such obligations.
What is an off-the-plan Contract?
The Conveyancing Legislation Amendment Act 2018 (NSW) defines an off-the-plan contract as a contract for the sale of a residential lot that has not been created at the time the contract is entered into.
What are the changes?
- The default 5 business day cooling off period has been replaced with a 10 business day cooling off period. However, this can be waived or shortened with a 66W Certificate;
- The Deposit must be held in trust by an agent or solicitor until completion. Vendors can no longer negotiate the release of part or all of the deposit prior to completion;
- Purchasers must be provided with a minimum 21-day completion period following receipt of the registration notice (together with full copies of the registered plan and any dealings registered with the plan) and Occupation Certificate. The 21-day period cannot commence until registered documents are served.
- A disclosure statement must be attached to the Contract and it must include:
- draft plan prepared by a registered surveyor;
- any proposed schedule of finishes;
- any section 88B instrument which is intended to be lodged with the draft plan;
- draft by-laws (if strata);
- draft strata development contract (if staged development or neighbourhood, precinct or community scheme); and
- draft management statement (if stratum or neighbourhood, precinct or community scheme).
Failure to attach a disclosure statement or a document required to be attached to the disclosure statement will mean that the purchaser can rescind the contract within 14 days from exchange.
If the disclosure statement is inaccurate in respect to a material particular, a vendor will be required to serve a notice of changes in the approved form at least 21 days before completion of the Contract. A purchaser will then have the right to rescind the Contract or make a claim however, they must do so within 14 days after being served with a notice of changes. The right to make a claim or rescind is lost after this period.
What is a material particular?
The Conveyancing Legislation Amendment Act 2018 (NSW) has defined a material particular to include a change to the draft plan, the draft by-laws, an easement or covenant, the schedule of finishes or any other mater prescribed by the regulations that will, or is likely to, adversely affect the use and enjoyment of the lot. Note: the following are not considered a change to a material particular:
- address of the lot;
- lot number;
- proposed allocation of costs of shared expenses under a strata management statement or building management statement (provided the allocation complies with legislation); and
- the location of the parking or storage area (if strata) provided the change is made in accordance with the contract.
If you are uncertain as to how these new laws may affect you as a vendor or purchaser, please contact our Property Team for more information.