Canberrans purchasing residential properties off-the-plan are to have greater protections under proposed changes to the use of sunset and development delay clauses.
Announced by Attorney-General, Shane Rattenbury, the Civil Law (Sale of Residential Property) Amendment Bill 2021 aims to ensure that contract rescission clauses are used for legitimate purposes and to curtail instances where the clauses could be abused.
“Under the current law, property developers can rescind a contract if certain deadlines haven’t been met under rescission clauses,” Mr Rattenbury said.
“Over the last few months, I have received a concerning number of complaints about the trend of developers rescinding contracts under these clauses,” he said.
“This shouldn’t be allowed to occur except in legitimate, justifiable circumstances, and certainly not just because a developer has determined they can make a greater profit elsewhere.”
Mr Rattenbury said that, under the proposed changes, developers would still be able to include sunset and development delay clauses in off-the-plan contracts, but they would only be able to use the clauses to rescind a contract if the buyer consented, or if they were permitted to by an order of the ACT Supreme Court.
The Attorney-General said the reforms would require developers to provide 28 days’ written notice to buyers explaining the reasoning behind the proposed rescission.
“Then, the buyer may or may not give written consent to the rescission,” he said.
“If the buyer has not given written consent, the developer may seek an order from the Supreme Court to rescind a contract.”
Mr Rattenbury said the amendments would apply to both sunset clauses and delay clauses, “as the evidence we have is that delay clauses give the same opening for inappropriate opportunistic conduct”.
He said that when deciding an application from the developer, the Supreme Court must consider a range of factors, including the impact of rescission on both the buyer and seller.
“If a developer wants to pursue the matter in the Supreme Court, the developer will be liable to pay the costs of the buyer unless they are able to establish that the purchaser has unreasonably withheld their consent.”
Mr Rattenbury said the proposed protections would help increase confidence in the off-the-plan process and create a fairer and more equal system.
