Australia: Issues for property developers and landlords

Last Updated: 4 April 2011
Article by Justin Lethlean, Rohan Ingleton, Steven Mackay and Jodie Masson

A reminder of what has been happening

Vendors cannot extend the registration date for the plan of subdivision

The landmark decision of the Victorian Supreme Court in Solid Investments v Clifford [2010] VSCA 59 (Clifford Case) is a reminder that it is crucial for vendors to specify a date for registration of the plan of subdivision that is "fixed, definite and certain".

In the Clifford Case, the off-the-plan contracts stipulated that, if the plan of subdivision was not registered within 30 months from the day of sale, the purchaser could rescind the contracts. The contracts contained the usual provision allowing the registration date to be extended on the occurrence of specified events, which the vendor relied upon.

Section 9AE(2) of the Saleof Land Act 1962 (Vic) (Act) provides the purchaser with a statutory right to rescind the contract if the plan of subdivision is not registered within 18 months or another period specified in the contract. The purchasers sought to rescind the contract and argued that section 9AE(2) of the Act prevented the vendor from extending the registration date.

At first instance, Justice Bongiorno held that, if the parties wanted to specify a period for registration of the plan of subdivision other than the statutory period, then that other period must be specified in the contract of sale. The parties cannot change this period, once specified in the contract, whether by subsequent agreement or by any other provision of the contract.

The vendor's appeal from the decision of Bongiorno J was unanimously dismissed by the Court of Appeal.

The Clifford Case creates uncertainty for property developers as they can no longer rely on the usual provisions in off-the-plan contracts to extend the date for registration of the plan of subdivision. In practical terms, property developers will now need to factor in potential delays in fixing an appropriate registration date.

New Australian Consumer Law commenced on 1 January 2011

Since our e-alerts late last year on the likely impact of the new Australian Consumer Law reforms on property developers (Further significant changes for property developers and Maximum deposits for off-the-plan sales contracts), the new Competition and Consumer Act 2010 (Cth) (Act), which implements the national uniform consumer law in Australia, came into effect on 1 January 2011. Property developers must ensure that their off-the-plan contracts of sale comply with Act. There are heavy penalties for breaches of the Act.

Mandatory compliance with Building Energy Efficiency disclosure

The national mandatory disclosure scheme established under the Building Energy Efficiency Disclosure Act 2010 (Cth) (Act) commenced on 1 November 2010. For a summary of the compliance requirements under the Act, refer to our e-alert we released in October 2010 (Energy Efficiency disclosure). Owners, landlords and sub-landlords must ensure compliance with the Act, not only to avoid delays in selling or leasing buildings caught by the Act, but also heavy penalties for breaches of the Act.

New form of disclosure statement for the Victorian retail industry

As you may recall in our e-alert last year ( New disclosure statements for retail tenants), we outlined the requirements of the new comprehensive disclosure statements which must be used for new leases entered into or leases renewed on or after 1 January 2011.

Those who have had to prepare the new form of disclosure statement will agree that the additional information required are unnecessary and time consuming. Time will tell whether this new form of disclosure statement will be suited for the Victorian retail industry.

Please contact us if you require advice or any information on the issues contained in this article.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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