In brief - Both vendors and purchasers have right to rescind if
strata subdivision not registered by sunset date
An off-the-plan contract for sale of an apartment normally
includes a provision that if a strata subdivision (creating title
to the apartment) is not registered by a certain date (the
"sunset date"), either party may rescind the
Strata subdivision not registered by sunset date and purchaser
issues notice of rescission
A recent NSW Supreme Court case, Cong Xu v Austino Property Development, involved an
off-the-plan sale contract where a strata subdivision sunset date
had passed without registration of the subdivision. Neither party
immediately rescinded or even discussed rescission.
On or very shortly after the sunset date, the building had been
completed, an occupation certificate had been issued, registration
of the strata subdivision plan was imminent, the purchaser had
inspected the property and asked for a few minor defects to be
fixed (which was apparently agreed) and the purchaser had asked for
a licence to move in (which was also agreed).
A few days after receiving the licence, however, the purchaser
obviously changed its mind and issued a notice of rescission based
on non-registration of the strata subdivision by the sunset date.
Supreme Court Justice Darke upheld the purchaser's right to do
A particularly unfair aspect of this case was that the vendor
developer was entitled to extend the sunset date by about six
months. It purported to exercise this right after receiving the
notice of rescission but, having found that the contract was
validly rescinded, the Court had no regard to this.
Developer rescinds contract after purchaser refuses to pay
increased sale contract price
The decision in Cong Xu v Austino was not unusual. For
example, in the 2001 NSW Supreme Court case of Kristiansen v Klepac, an off-the-plan contract
subdivision sunset date had also passed without registration of the
subdivision. Shortly after the sunset date, the purchaser requested
and the developer installed a deadlock, tiles and pavers at the
purchaser's cost (because those items were not included in the
sale contract schedule of finishes).
After installing these additional items, and now about one month
after the sunset date, the developer advised that it would
"pull out of the contract" unless the purchaser agreed to
the sale contract price being increased by $20,000. The purchaser
immediately refused. Six weeks after the purchaser refused (and
just six weeks before the strata division was registered), the
developer rescinded. Supreme Court Justice Young upheld the
developer's right to do so.
Developers should review sunset date provisions carefully
before issuing first contracts
In each case, the judge stated that his decision turned on the
facts of the case and, in different fact situations, he might
determine that a party could not rely on a sunset date provision to
terminate a contract.
What is clear from both cases, however, is that neither a
purchaser nor a developer may confidently assume that an agreement
to waive a sunset date condition can be implied from any action or
inaction of the other party, and off-the-plan apartment developers
should always ensure that their standard contract sunset date
provisions are carefully reviewed before the first contracts are
Many retail leases include a covenant to trade, requiring the tenant to open the premises for trade during certain hours.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).