From 1 September 2011, a failure to include three dot points on the front page of your contracts is all it may take for a purchaser to rescind your off-the-plan sales contracts.

The impending change is critical for developers, financiers and estate agents.

You may recall our series of eAlerts over the last 12 months that have considered the various amendments to off-the-plan contracts that are to be introduced by the Consumer Affairs Legislation Amendment (Reform) Act 2010 (Vic).

The following new notices to purchasers are not only required in the contract, but they must also be inserted on the front page:

  • subject to the limit set by section 9AA(1)(b) of the Sale of Land Act 1962 (Vic), the purchaser may negotiate with the vendor about the amount of deposit moneys payable under the contract
  • a substantial period of time may elapse between the day on which the purchaser signs the contract for sale and the day on which the purchaser becomes the registered proprietor of the lot
  • the value of the lot may change between the day on which the purchaser signs the contract for sale of that lot and the day on which the purchaser becomes the registered proprietor.

If these notices are not included on the front page, a purchaser may be able to rescind the contract at any stage until the plan of subdivision is registered.

It is imperative that developers and agents have the front pages (including covers or other marketing pages) of their contracts amended to include the notices for all contracts that will be exchanged on or after 1 September 2011.

Finally, contracts of sale must also be amended by removing or striking out the cooling off exception where a purchaser obtains legal advice before signing a contract. From 1 September 2011, purchasers will be able to obtain legal advice and still retain their cooling off rights.

We are including the notices in new off-the-plan contracts we prepare for our clients for all new instructions that we receive, but given the dramatic consequences, developers should take stock of their current contracts for unsold lots and either:

  • request new contracts for a development to be prepared and destroy current contracts before 1 September 2011; or
  • insert the notice on the front cover of existing contracts and strike out the cooling off exemption.

Please contact us if you have any queries regarding the new notice requirements and your contracts of sale.

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.