Retrospective changes to off the plan sunset clauses in Victorian land contracts

 Tuesday, June 25, 2019


The Victorian Parliament has just passed the Sale of Land Amendment Bill 2019 giving effect to changes to off the plan sunset clauses in contracts for sale of land. These changes will retrospectively apply from 23 August 2018 and will affect all existing residential off the plan contracts no matter the date they were signed.

Under the new law, developers and other vendors will no longer be able to rescind off the plan contracts for residential land without:

1. Providing the purchaser with at least 28 days written notice of the proposed rescission detailing the reason why the vendor wishes to rescind the contract and the reason for any delay in procuring the registration of the plan of subdivision or occupancy permit (as the case may be); and

2. The purchaser consents to the rescission of the contract.

If the purchaser does not agree to the rescission of the contract, the vendor may apply to the Supreme Court for an order rescinding the contract provided they can demonstrate to the Court that it is just an equitable to do so. In determining whether it is just and equitable to make an order rescinding the contract, the Court will consider factors such as the terms of the contract, whether the vendor has acted in bad faith, the likely date of registration of the plan or issue of the occupancy permit, whether the subject lot has increased in value and the effect of the rescission on the purchaser.

Developers and vendors will not be able to contract out of these requirements, that is, a special condition cannot be including in the contract purporting to exclude the new requirements. If a developer is found to breach the new requirements, they will be in breach of the Contract with the usual remedies available to the purchaser for a breach of contract, such as the right to seek damages.

The new law mirrors that introduced by the NSW Government in late 2015 in an effort to target developers who sought to exercise their rights to rescind contracts pursuant to the sunset clause and subsequently re-sell the property for a higher price.