The NSW Government recently announced that new laws giving further protection to off-the-plan property buyers would be introduced to state parliament later in the year. NSW Property Minister Victor Dominello applauded the incoming reforms for aiming to provide greater protections to NSW property owners, and to correct what he called the 'inequality buyer's face in the current bargaining process'.
Additionally, the proposed changes will look to clarify the role of electronic contracts in land transactions.
The new law reform includes a number of proposed changes which are important for developers and future property owners alike to both recognise and understand. The reforms provide greater protection for off-the-plan buyers through various changes.
These proposed changes have come about following in-depth consultations, after the Office of the Registrar General released the 'off-the-plan contracts for residential property' discussion paper in December 2017.
Under the reform:
- A vendor disclosure regime will be introduced, which will require all developers who sell off-the-plan properties to provide more details to the purchaser with regard to what they are actually buying.
- Developers will also need to provide a disclosure statement
that comprises of:
- A copy of the proposed plan (including details of easements and covenants);
- Proposed bylaws (in the case of strata and community properties); and
- A schedule of finishes (where building work is required as part of the contract).
- Developers must notify the purchasers of any changes made during the development. Buyers will also be given a copy of the proposed plans prior to the contract being signed, allowing them to either cancel the contract or make a claim for compensation if the developer does make any material changes.
- The cooling off period for off-the-plan contracts are to be extended to 10 business days, with deposits being held in a controlled account.
- The widening of the definition of 'sunset clause' will provide greater strength to existing sunset clause protections (see our previous blog on sunset clauses).
The proposed reforms will affect the flexibility of electronic contracts in land transactions, as recognised through the following proposed changes:
- Greater clarity will be given with regard to land contracts, and the use of registry instruments being signed electronically. Further to this, vendor disclosure being given by electronic means will be looked at.
- The reforms will remove the traditional requirements for deeds to be in paper, allowing these to be signed and witnessed electronically.
For further information on the proposal to remove barriers to electronic land contracts, we suggest reading through the Office of the Registrar General's Discussion Paper on the topic.
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.