Building-related delays in Victoria such as material shortage, skilled labour availability, and unexpected weather events are a common issue. If you have signed a contract for an off-the-plan property and are concerned about the timeline, there are certain circumstances in which you may be able to terminate an off-the-plan contract. These include:
- Cooling-off rights
- Changes or variations to the property, land or disclosure statements
- Failure to disclose material facts
- Expiry of the sunset date
What is ‘off-the-plan’?
Buying off-the-plan refers to entering into a contract of sale to purchase a new property that has not yet been built or developed. Where the purchase is for land, off-the-plan means that the land being sold has not yet been divided from other pieces of land.
Cooling-off
Most states and territories (except WA and TAS) provide a cooling-off period, which is a short window of 2 to 5 business days after signing a contract during which the buyer can withdraw from the contract. A small termination fee, usually around 0.2% to 0.25% of the purchase price often applies.
Changes or variations to the property, land or disclosure statements
Developers are generally allowed to make changes to off-the-plan projects after contracts are signed. However, if the changes:
• Exceed 5%; and
• Materially affect the buyer (known as material prejudice),
then the buyer may be entitled to cancel the contract. The 5% typically refers to a change in size or layout such as, internal floor area, courtyard, balcony or car space.
Example of material prejudice
A buyer signs a contract for an off-the-plan apartment that includes a car space. A 15% reduction in the size of the parking space may make it too small for the buyer’s vehicle, which can be considered materially prejudicial. This may allow the buyer to terminate.
Failure to disclose material facts
In Victoria, under the Sale of Land Act 1962, sellers must provide buyers with specific details through a disclosure statement that must be attached to the contract.
If the seller fails to disclose a material fact, or provides incorrect details, the buyer may have the right to terminate the contract if remaining in the contract would materially prejudice them.
Sunset dates
A sunset date is the deadline by which the development must be completed (e.g. registering the land or getting an occupancy permit). If this deadline isn’t met, either the buyer or seller may terminate the contract. However, sellers generally need the buyer’s consent or court approval to terminate under a sunset clause. The rules vary across states and territories, so it’s best to obtain advice specific to your circumstances.
Need Help?
If you’re not sure about your rights under an off-the-plan contract or need assistance with your conveyancing in Victoria, contact our property conveyancing lawyers in Melbourne at hello@wlegalgroup.com.au or call any of our Australian phone numbers.
