Victorian 'Off The Plan' Retrospective Sunset Provisions
A new bill recently introduced into the Victorian parliament proposes amendments to the operation of sunset clauses in residential “off the plan” sales contracts.
Adam Held - Held Lawyers
The Sale of Land Act Amendment Bill 2019 (Vic) (the bill) recently introduced into the Victorian parliament proposes amendments to the Sale of Land Act 1962 (Vic) (the SL Act), in particular, the operation of sunset clauses in residential “off the plan” sales contracts (ROTP contracts).
A sunset clause is a provision in a ROTP contract that provides for the contract to be rescinded if the relevant plan of subdivision has not been registered or occupancy permit has not been issued by the nominated sunset date.
The proposed new requirements would prevent a vendor rescinding ROTP contracts based on a sunset clause without:
- at least 28 days’ written notice to purchaser; and
- a purchaser’s consent.
The bill provides that the ‘notice’ and ‘consent’ provisions will apply to sunset clauses in all ROTP contracts with retrospective operation from 23 August 2018. Sunset clauses in existing contracts purporting to provide for automatic rescission will be taken to be substituted by the new requirements.
The bill proposes new provisions for regulating sunset clauses in ROTP contracts to prevent a vendor from unjustly rescinding such contracts:
1. Proposed new section 10A – to commence retrospectively from 23 August 2018. A sunset clause in a ROTP contract on foot at 23 August 2018 that purports to automatically rescind the contract on the part of the vendor will be taken to permit the contract to be rescinded only in accordance with proposed new sections 10B – 10F.
2. Proposed new section 10B – to commence retrospectively from 23 August 2018. Section 10B will prohibit a vendor from rescinding a ROTP contract under a sunset clause unless the written consent of each purchaser to the rescission has been obtained and each purchaser has been given at least 28 days’ written notice before the proposed rescission. The notice must specify:
- the reason why the vendor proposes to rescind the contract
- the reason for the delay in registering the plan of subdivision or the issuing of the occupancy permit
- that the purchaser is not obliged to consent to the proposed rescission.
3. Proposed new section 10C – to commence retrospectively from 23 August 2018. Any attempt to contract out of proposed new sections 10A and 10B will be of no effect.
4. Proposed new section 10D – to commence retrospectively from 23 August 2018. Any attempt to rescind an off the plan contract in contravention of the above provisions will be taken to be a breach of the contract. This would entitle the purchaser to take all contractual remedies available to them for a breach of contract, such as issue a default notice and rescind the contract and claim damages.
5. Proposed new section 10E – to commence the day after royal assent. A vendor can also apply to the Supreme Court for an order permitting rescission of a ROTP contract under a sunset clause if it is just and equitable in the circumstances. Section 10E details matters the court must take into account when determining whether it is just and equitable to order rescission of the contract.
6. Proposed new section 10F – to commence on proclamation. All new ROTP contracts entered into after proclamation of the amending legislation must include a statement that:
- the vendor is required to give notice of a proposed rescission of the contract under the sunset clause
- the purchaser has the right to consent to the proposed rescission but is not obliged to consent
- the vendor has the right to apply to the Supreme Court for an order permitting the vendor to rescind the contract
- the Supreme Court may make an order permitting the rescission of the contract if satisfied that making the order is just and equitable in all the circumstances.
Failure to provide the statement in the contract will expose the vendor to a penalty under the SL Act.
If you would like further details or assistance or to discuss the information contained in this article or more generally, please do not hesitate to contact us at Held Lawyers, or visit our website at www.heldlawyers.com.
This article is intended to provide commentary and general information only. It should not be relied upon as legal advice. It is not intended to be a complete or definitive statement of the law on the subject matter covered. Further professional advice should be sought before any action is taken in relation to the matters described.