For people thinking about developing property, there is an inevitable tension:
- The need to test the viability of the development – getting it out into the market and seeing what interest there is;
- Putting together all the detail and documents – takes time;
- Satisfying a financier on pre-sales.
And, as our developer clients know, you can’t put a property on the market without a Contract!
Finding the elusive balance between enough information for a binding Contract, and not spending too much money on the fine detail is always a pinch point in getting a marketing Contract together, especially for developers of small scale projects.
And . . . it is about to get harder. The NSW Minister for Finance, Services and Property, Victor Dominello has announced proposed changes to the Conveyancing Act to better protect off-the-plan buyers, and as lawyers who act for both developers and off-the-plan purchasers, we can see the policy reasons behind the changes.
These changes are going to be put to Parliament, we are told, before the end of the year. As if often the case with such announcements, the detail is scarce. We are told from the press release (23 June 2018):
The reforms include:
- Buyers being provided with a copy of the proposed plan, proposed by-laws and a schedule of finishes before Contracts are signed;
- Vendors providing a copy of the final plan (and notice of changes) at least 21 days before the buyer can be compelled to settle;
- Allowing buyers to terminate the Contract or claim compensation if they are materially impacted by changes made from what was disclosed;
- Widening existing legislation to clarify that the Supreme Court can award damages where the vendor terminates under a sunset clause; and
- Extending the cooling off period to 10 business days with any deposit to be held in a controlled account.
In reality, this will mean there will need to be a great deal of information prepared prior to the first marketing contract being issued. People looking at developing in the near future should be aware of these changes, and plan as if they had come into force.
Contact Keystone Lawyers for assistance with preparing your off-the-plan Contracts.