Six months ago Legal Light raised concerns home buyers and investors who bought apartments off-the-plan were shocked by developers dumping their contract and reselling the property for a far higher price.
The developers were exploiting a sunset clause loophole in off-the-plan purchasing conveyancing laws. The original purpose of the sunset clause was to protect both buyers and sellers in unfinished developments so that either side could get their money back if the building wasn't completed or the buyer didn't complete their payment.
But with the soaring property market some developers delayed completing construction until the sunset clause kicked in, then demanded more money or they would rescind the contract and raise the sale price of the property.
Now the government has acted to close the loophole. Under new conveyancing laws off-the-plan buyers will have greater protections that require developers to justify any sunset clause termination.
Developers will need a buyer's consent before they end a contract using a sunset clause, otherwise the developer will need to apply to the Supreme Court to justify termination of the contract.
Merrill Phillips, conveyancing expert at Stacks Law Firm, said it was important to get experienced legal advice before signing any property contract as they can be very complicated.
"For most of us buying a home or investment property is the biggest purchase of our lives, so it is very important to make sure you are legally protected and you get what you are paying for," she said.
"It can also happen that developers will try and sell you something that looks fantastic in designer models and glossy brochures, but then seek to change the size and arrangement of apartments after you sign. You need to know your rights.
"Every contract is different and you should obtain legal advice on its conditions and terms, as well as what you are liable for if you withdraw from the contract. A legal expert can spot the pitfalls in a contract, including by-laws that might apply in a communal development.
"Buyers should also consider whether the contract allows them to make changes to finishes of the apartment such as appliances and tiles and sinks in bathrooms and kitchens. "They should also be aware that sometimes the sunset date on the contract can be extended at the discretion of the Vendor. This extension could be for an additional 12 months or more, resulting in the "off the plan purchase" not being available when originally intended."
The Department of Fair Trading advises anyone buying property to get legal advice on the contract as there can be costly pitfalls.
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.
