Justin Lucas reports that "off the plan" contracts for
the sale of land in Victoria are under attack again. The Victorian
Supreme Court determined this month that the registration period
specified in off the plan contracts is not capable of being
extended. Such contracts routinely provide a right for the
developer to extend the registration period in order to allow
sufficient time for the plan of subdivision to be registered. The
decision means that developers cannot rely on time extension
clauses but must, before signing up purchasers, ensure that their
contracts specify a sufficient period for registration or risk
purchasers having an entitlement to avoid the contract.
In Victoria, unsubdivided land may be sold "off the
plan" subject to compliance with certain rules aimed at
consumer protection provided in the Sale of Land Act. One rule is
that the contract "specify" a period for the registration
of the plan of subdivision after which either party may terminate
the contract (if the plan has not been registered). Since this
requirement was introduced in the early 1990s, off the plan
contracts have routinely provided a right for the developer to
extend the stated time frame due to delays or as of right for a
The case involved a multistorey apartment project. The land sale
contracts for the project specified a 30 month period for
registration of the plan ending around late January 2009. The
developer gave notice on three occasions purporting to extend the
registration date, in aggregate, to 31 May 2009. Each extension
notice was given before the expiry of the registration period as
On 27 March 2009, the purchaser purported to terminate the
contract arguing that the extensions were invalid. The developer
sought to enforce the contract.
In the decision published on 5 June 2009, a single judge of the
Victorian Supreme Court held that the period for registration under
an "off the plan" contract, once stated in the contract,
cannot be changed.
After reviewing the history of the introduction and progressive
amendment of the relevant consumer protection provisions, the Court
concluded that the purpose of the provisions was to provide
purchasers with certainty. Accordingly, the Court determined that
the time frame, once stated in the contract, is not capable of
being subsequently changed in a way that binds the purchaser. This
was held to apply even where the purchaser subsequently agrees to
the change. Equally, it extends to defeat the operation of any
provision of the contract that would have the effect of changing
the registration date.
An appeal against the decision was lodged on 19 June, so it is
not yet clear whether the decision will ultimately stand.
As market leaders in property law, we will be raising the impact
of this decision with government, through appropriate industry
bodies, seeking legislative reform to protect projects, jobs and
security of the industry.
Until the appeal is determined, developers and other vendors of
land off the plan should ensure that the period allowed for
registration is more than ample or risk purchasers having an
entitlement to terminate.
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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The article discusses the legislative requirements and then provides some comments on common mistakes made by caveators.
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