Residential Property Transactions and Valuations – written by Rachel Clutterbuck Lawyer. If you are acquiring residential property in Queensland, you will generally have to pay transfer duty. Transfer duty on aContinue
Off the Plan Contracts: Sunset Dates
Off the plan contracts are regularly used for the sale of property in developing estates and allow for the sale of property prior to a building being constructed. In Queensland, the rules for off the plan contracts in larger developments are governed by the Land Sales Act and the Body Corporate and Community Management Act if buying into a Body Corporate Scheme. These contracts are subject to strict disclosure obligations to enable the buyer to identify the lot they are purchasing, and provide a timeframe for when contracts must be completed. This timeframe is known as the ‘sunset date’.
A sunset date in an off the pan contract generally provides that where the property has not been constructed within a certain timeframe, either party is able to terminate the contract. This timeframe can range from 18 months when purchasing land, to 5 and a half years if buying into a Body Corporate Scheme. An off the plan purchase can be a lengthy process, and between the signing of the contract to the final stages of development the value of the property may have risen substantially. Where the property has not been constructed by the sunset date, and the developer can show they have used their best endeavours to attempt completion, they may terminate the contract and resell the property for the higher value as occurred recently in the New South Wales case of Wang v Kayment Corporation Pty Limited. Although arguably underhanded, the move was valid under the terms of the contract and the property subsequently resold at the higher value.
The New South Wales government as a result has now moved to introduce new legislation to cover such events, and require a developer to seek the consent of the purchaser should they wish to terminate a contract at the expiry of the sunset date. Currently there is no plan to amend legislation in Queensland to provide for the same. Buyers should be aware of the existence of a sunset date and the repercussions if it expires prior to the completion of the property.
Sunshine Coast Lawyers, Miller Sockhill Lawyers can assist with any commercial property matters. Please contact Tammy Wills, Solicitor on 07 5444 4750.