New South Wales has followed its underquoting reforms with a new set of proposals to protect off-the-plan buyers.
The government is considering reforming the Conveyancing Act 1919 to stop developers exploiting buyers.
One reform being considered is allowing only the purchaser to rescind off-the-plan contracts.
Another reform under consideration is for developers to have to compensate buyers if they terminate a contract under a sunset clause and resell the same unit.
The damages would be equal to the difference on the sale price between the two contracts.
Minister for Better Regulation Victor Dominello said there is growing concern about the way sunset clauses are being used to rescind off-the-plan contracts.
“With buying off-the-plan becoming more and more common, particularly for new strata schemes, this is something we need to look at closely,” he said.
Sunset clauses are usually contained in contracts for buying land or strata units off-the-plan. They allow either the buyer or the developer to rescind a contract after a certain date, usually in the event that construction is not finished on schedule.
Some NSW consumers have reportedly had their contracts rescinded by a developer using the sunset clause, only for the land or apartment to be re-sold the same day for a higher price.
To understand the extent of the problem, Land and Property Information and NSW Fair Trading have started a public consultation. Feedback is due by 14 October.