Changes to the Conveyancing Act 1919 (NSW) apply
retrospectively from 2 November 2015
We recently informed you of the NSW government's intention
to tighten its grip on property development regulations,
specifically in relation to sunset clauses.
On 17 November 2015 the Conveyancing Amendment (Sunset
Clauses) Act 2015 (NSW) was passed in Parliament to provide
increased protection to purchasers by preventing developers from
unreasonably rescinding off-the-plan contracts for residential
property under a sunset clause.
These changes are effective retrospectively from 2 November 2015
(the date Victor Dominello introduced the reforms to Parliament) to
prevent a rush of rescissions prior to the formal commencement of
the legislation. In accordance with the new provisions, a vendor
must give a purchaser notice in writing at least 28 days prior to
rescission under a sunset clause. The notice must state why the
vendor is proposing to rescind and give reasons for the delay in
So long as the off-the-plan lot has not been created before the
sunset date, a vendor can rescind under a sunset clause only
the purchasers give written consent to the vendor's
proposed rescission; or
the vendor obtains an order from the Supreme Court permitting
the rescission; or
the reason for rescission comes within a category prescribed by
the regulations (no regulations have yet been made).
In considering an application from a vendor to rescind under a
sunset clause, the Supreme Court will consider:
the terms of the contract;
whether the vendor has acted unreasonably or in bad faith;
the reason for the delay;
whether the subject lot has increased in value; and
any other matter the court considers relevant.
By forcing the vendor to obtain an order from the Supreme Court,
purchasers are no longer burdened with the cost of commencing
proceedings if they feel their contract was unjustly terminated. In
fact, the vendor will be liable for the purchaser's costs
unless the vendor can demonstrate the purchaser's refusal to
consent was unreasonable.
If you require any further information on these changes, or
specific advice if you are a developer or purchaser, please feel
free to contact us.
Warranties can be risk-shifting mechanisms when the party giving the warranty is not the party at fault for the defect.
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).