Vendors face new restrictions when seeking to activate sunset clauses to end off the plan contracts in Victoria.
Amendments for off the plan contracts
The Sale of Land Amendment Act 2019 commenced on 4 June 2019. It amends the Sale of Land Act 1962. The amendments require vendors wishing to end residential off the plan contracts pursuant to a sunset clause to either obtain the purchaser’s consent, or an order from the Supreme Court.
New notice requirements created by section 13 of the amending Act for off-the-plan contracts for residential land including a sunset clause, have yet to commence.
The changes do not affect the existing statutory rights of purchasers to end a contract if the plan of subdivision is not approved by the sunset date.
Section 10A of the Sale of Land Act 1962 provides that if a sunset clause in a contract allows the vendor to rescind the contract, then rescission must be in accordance with the Act. Section 10C overcomes any inconsistent contractual provision.
Section 10B of the Sale of Land Act prohibits a vendor from relying on a sunset clause unless the vendor obtains the purchaser’s written consent to any such rescission.
A vendor seeking to obtain the purchaser’s consent must give the purchaser 28 days notice setting out the reason that the vendor proposes to rescind, the reason for the delay in registration of the plan and that the purchaser is not obliged to consent to the proposed rescission.
A precedent ‘Notice of rescission of off the plan contract’ in accordance with s 10B(3) can be found on the By Lawyers matter plan.
Section 10D of the Sale of Land Act provides that the vendor may apply to the Supreme Court for an order permitting the vendor to rescind a contract pursuant to a sunset clause. The Court must consider a wide variety of matters relating to the contract and the property, including increase in value. If an order is made it may include compensation to the purchaser and the vendor will be liable for the purchaser’s costs.
Section 10F, created by section 13 of the Amendment Act, has yet to commence. This new section will require residential off-the-plan contracts that include a sunset clause to include a notice informing the purchaser that:
- the vendor may give a notice proposing to rescind the contract;
- the purchaser may consent to rescission, but is not obliged to consent;
- the vendor may apply to the court for an order permitting rescission;
- the court may make such an order.
A precedent notice in compliance with s 10F will be included in General Condition 9 of the By Lawyers contract on commencement of s 10F.
By Lawyers contract
The general conditions and particulars of sale in the By Lawyers Contract satisfy all of the statutory requirements when selling prior to registration, relying on the default sunset period of 18 months.