Off-the-plan purchasers to be better protected in the ACT

Attorney-General Shane Rattenbury said that he received “a concerning number of complaints” about the trend of developers rescinding contracts over the last few months.

“Under the current law, property developers can rescind a contract if certain deadlines haven’t been met under rescission clauses.”

The Attorney-General said he is “very concerned to hear about homebuyers losing the homes they set their hearts on, now inconvenienced and potentially out of pocket”.

From his perspective, “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.”

That stance led him to present the Civil Law (Sale of Residential Property) Amendment Bill 2021 in the territory’s assembly on 9 November, 2021, “to ensure rescission clauses are used for the legitimate purposes for which they are included in contracts and to curtail any cases where they could be abused.”

Mr Rattenbury explained that under the proposed changes, developers would still be able to include sunset and development delay clauses in off-the plan contracts, “but they will only be able to use these clauses to rescind a contract if the buyer consents or if they’re permitted by an order of the ACT Supreme Court.”

He stated: “The developer must provide 28 days written notice to the buyer, setting out the reasoning behind the proposed rescission under the sunset or delay clause. Then, the buyer may or may not give written consent to the rescission. If the buyer has not given written consent, the developer may seek an order from the Supreme Court to rescind a contract.”

The proposed changes would see the Supreme Court must consider a range of factors, including the impact of rescission on both the buyer and seller, when deciding an application from the developer for an order.

“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.”

According to the Attorney-General, the amendments have been adapted from similar legislative responses in Victoria and New South Wales, but also go further – applying both to sunset clauses and delay clauses.

“The evidence we have is that delay clauses give the same opening for inappropriate opportunistic conduct,” Mr Rattenbury revealed.

He said that the new protections for home buyers would help increase confidence from all parties involved in the off-the-plan process and create a more fair and equal system for all Canberrans.