The Conveyancing (Legislation) Amendment Act 2018 (Act), passed by the New South Wales Parliament on 13 November 2018, has provided additional protection to purchasers of off-the-plan properties through mandatory disclosure requirements and extended cooling-off periods.
Vendor’s mandatory disclosure
Under the Act, Vendors will be required to provide Purchasers with a disclosure statement attached to the contract for sale. The disclosure statement is required to include a copy of the draft plan prepared by a registered surveyor, and other prescribed documents that are expected to include a schedule of finishes and proposed by-laws.
These requirements are intended to decrease the risk involved in buying off-the-plan by providing purchasers additional confidence and certainty in their investment.
In the event any material particulars enclosed in the disclosure statement are, or become inaccurate, vendors must provide purchasers with a notice of changes to the disclosure statement at least 21 days prior to completion.
In relation to what constitutes a material particular, the Act defines it to include a change in the following, if it affects the purchaser’s use or enjoyment of the property:
- a change to the draft plan;
- a provision of the draft by-laws;
- an easement or covenant; or
- changes to the schedule of finishes.
Vendors will also have to serve on the purchaser a registered plan, and any other document registered with the plan, prior to completion.
Purchaser’s right to rescind
Purchasers are provided additional protection as they can rescind the off-the-plan contract within 14 days of receiving the notice of changes and registered plan from the vendor, if:
- the purchaser would not have entered into the contract had they been aware of the changes or inaccuracies of the material particulars; and
- the purchaser would be materially prejudiced by the changes or inaccuracies of the material particulars.
As stated by the Minister of Finance, Services and Property, Victor Dominello:
“The new laws will bolster existing protections for buyers, by establishing minimum disclosure standards and ensuring that developers are held accountable for delivering what they promised at the time of purchase.”
Off-the-plan purchasers will further benefit under the new Act as the cooling off period for off-the-plan contracts will be extended to 10 business days, providing purchasers an additional five business days to rescind the contract.
While the Act is likely to increase the demand for purchasing properties off-the-plan due to the increased protection and certainty, vendors should be vigilant and conscious of their new obligations.
Although the Act is yet to come into effect, it is important for developers to consider reviewing their contracts for the sale to ensure they comply with the new requirements once the Act is passed.