When it receives Royal Assent (possibly as early as Friday 27 November 2015) the new section 66ZL will apply retrospectively as and from 2 November 2015.
The amendment was prompted by media attention when purchasers felt disadvantaged after their off the plan contracts at Surry Hills were rescinded by the vendor after the sunset date had passed. The vendor used a "sunset" provision of an off the plan contract that provided for the contract to be rescinded if the subject lot was not registered by the sunset date.
The new provisions will mean that once the sunset date is reached a vendor can only rescind the contract if:
- the purchaser has consented to the rescission. The vendor must serve written notice 28 days before a notice to rescind informing the purchaser of the vendor's intention and specifying the reasons; or
- the vendor obtains a Supreme Court order permitting the rescission; or
- the regulations otherwise permit.
If the vendor applies to the Supreme Court, the Court will consider whether the rescission would be just and equitable in all the circumstances and will take into account a number of factors including:
- the terms of the contract;
- the reason for delays;
- whether the vendor has acted in bad faith;
- increases in value of the lot;
- the effect on the purchaser; and
- the likely date for creation of the lot.
It is interesting to note that the new provisions focus on the date the lot in a strata scheme is created (i.e. on registration of the strata plan). This leaves open the question of what rights the purchaser (and vendor) will have when a right to rescind exists after registration of the strata plan and (for example) before the issuing of the Occupation Certificate? It's not rocket science to see that these provisions are going to be open to challenges and creative drafting.