In New South Wales, purchasing property comes with certain risks and uncertainties, especially if you’re buying off-the-plan and there is a sunset period in the Contract for Sale. The sunset period is the timeframe during which the developer must do all things necessary to have the land formally registered, or to complete construction of the property, as specified in the Contract. If the developer fails to comply with this deadline, the parties have certain rights of termination.
If a purchaser wishes to terminate the Contract after the sunset period has expired, they must first provide written notice to the vendor under the terms of the Contract. The vendor then has to either rectify the breach within the notice period (that is, complete the construction of the property) or agree to the termination of the Contract. If the vendor agrees to terminate the Contract, the purchaser is entitled to a refund of any deposit and any other monies paid under the Contract.
In some cases, a developer vendor may wish to terminate the Contract after the sunset period has expired if they have been unable to have the land registered or construction completed due to circumstances beyond their control. Prior to the vendor being able to do this, they must obtain the consent of the purchaser in writing (or obtain an Order from the Supreme Court to allow this to happen). It is much more onerous for a developer to terminate a Contract for Sale because of the legislation that is in place to protect purchasers.
In the case of a booming property market, a purchaser may be more inclined to enforce the Contract despite that the sunset period has expired. This is because the land may have increased in value during the period that the parties were waiting for the registration of the land or construction of the build.
In a declining property market, where demand for off-the-plan properties may be lower, the rights of termination for the developer may be more limited. If a developer wishes to terminate the contract after the sunset period has expired, they may have difficulty finding another buyer and may be liable for compensation to the original purchaser. The purchaser may instead be more inclined to rescind with view to secure a purchase with a lower price in a declining market.
The rights of termination for a purchaser and developer after the sunset period has expired in an off-the-plan Contract for Sale in New South Wales are complex and depend on various factors, including the state of the property market. It is important for both parties to understand their rights and obligations and seek professional legal advice before making any decisions. Remember, knowledge is power. We have a team of property experts ready to help you with your next real estate transaction.
