Off the plan purchases changed on 1 December 2019 as a new 2019 edition of the Contract for the Sale and Purchase of Land was released. The main reason for this new edition is to reflect residential off the plan reforms.
Extended cooling off period
The cooling off period for buyers of residential off-the-plan premises has been extended from 5 business days to 10 business days. Any Contract entered into from 1 December 2019 provides buyers with this extended cooling off period.
From 2 June 2020, residential premises which are not off the plan will also be subject to the extended 10 business day cooling off period.
Purchaser to be given registered plan 21 days before settlement
For any off the plan contract entered into from 1 December 2019, developers will be required to serve the registered plan and any associated mandatory documents 21 days before settlement. A purchaser will not be required to settle earlier than 21 days of receipt of the registered plan. Up until this change was made, most contracts require a purchaser to settle within 14 days of service of the registered plan.
Note: that from 2 June 2020 all contracts for sale (whether off the plan or established properties) will need to use the new form of cooling off warning notice.
Deposit to be held in trust
From 1 December 2019, any money paid by a purchaser by way of a deposit must be retained by the stakeholder in a trust or controlled money account during the length of the contract. The deposit must not be released to the vendor until settlement. A purchaser is therefore better protected in the event of the developer’s insolvency.
New disclosure statement and other documents to be included in the Contract
Vendors of off the plan residential contracts must, from 1 December 2019, attach a completed Disclosure Statement in the approved form. A draft plan must also be included in the Contract which is to include specific information, including the following:
- A draft plan prepared by a registered surveyor which needs to show:
- The proposed lot number of the subject lot;
- Information to identify the location of the subject lot;
- The area of the subject lot;
- If the Contract relates to land that comprises or includes a lot in a proposed strata scheme -the draft floor plan and draft location plan;
- The site of any proposed easement or profit a prendre affecting the subject lot;
- The site of any proposed restriction on the use of land or positive covenant affecting only part of the subject lot.
The following are some of the documents that must also be included in a disclosure statement attached to an off the plan contract:
- any proposed schedule of finishes;
- any instrument under s 88B which is to be lodged with the draft plan;
- if the contract relates to land or includes a lot in a strata plan in a proposed strata scheme – the draft by-laws;
- applicable documents if the Contract relates to land or includes a lot in a proposed community, precinct or neighbourhood scheme, proposed development scheme.
Vendors to notify purchasers changes to ‘material particulars’
The new law requires vendors to notify purchasers of changes that make what was disclosed inaccurate in a material particular. These changes are characterised as being a matter that would adversely affect the use or enjoyment of the lot being sold. It may include changes to the following:
- The draft plan
- Schedule of finishes
- Easement(s) or covenant(s) registered on title
- Statements for the schemes.
Vendors must notify changes using the approved form.
In some cases, purchasers may be entitled to rescind the Contract because of a change to a material particular. Purchasers will be required to demonstrate that they would not have entered into the Contract had they been aware of the change and they are materially prejudiced by the change. Time limits apply to the vendor. There are alternatives available to a purchaser also to seek compensation should they wish to proceed with completion of the Contract. Any claim for compensation is up to 2% of the purchase price.
If buying into an off the plan strata scheme, note that the law does not require a draft strata plan to allocate storage or parking spaces.