From 1 December 2019, new laws to contracts for off the plan developments are now in effect. The changes introduce disclosure requirements on vendor developers so that there is greater transparency to buyers who are looking to buy off-the-plan.
The changes apply only to contracts for the sale of residential lots that have not been created at the time of the contract.
The most significant change is the introduction of a disclosure statement, similar to what retail landlords (and franchisors) are accustomed to preparing prior to entering into a retail lease (franchise agreement) with a tenant (franchisee). The disclosure statement must be attached to the contract.
The Conveyancing (Sale of Land) Amendment Regulation 2019 prescribes that certain matters must be included in a disclosure statement. These matters include:
- A draft plan containing sufficient information to identify the location of the lot, the proposed lot number, the area of the lot and if the lot is included in a proposed strata scheme, the draft floor plan and draft location plan (excluding parking or storage areas) amongst other things;
- A proposed schedule of finishes;
- The proposed by-laws or management statement (if any); and
- Proposed site of any easements, restrictions or other access rights.
If there is a change to a “material particular” (being a change in the draft plan, by-laws, management statement or schedule of finishes that will or is likely to adversely affect the use or enjoyment of the lot), the developer must serve the purchaser with a notice of changes. This will entitle the purchaser to rescind the contract within 14 days or claim compensation from the vendor of up to 2% of the purchase price. The claim must made on the vendor prior to completion.
The other notable change is that the cooling off period for off the plan contracts has been extended to 10 business days whereas the cooling off period under contracts for the sale of established homes is only 5 business days.