The Victorian Government has enshrined laws protecting Victorians buying property off-the-plan from delay tactics used by some property developers to rip people off.
The Sale of Land Amendment Bill 2019 has passed the Parliament, ensuring future and current homeowners are protected by up-to-date property laws.
Changes to sunset clauses under the new laws now means developers can only exercise a sunset clause with written consent from the buyer, or by an order of the Supreme Court of Victoria.
Off-the-plan contracts commonly include a sunset clause provision that allows a vendor – typically a professional developer – to terminate the contract where the plan of subdivision has not been registered by a specified date.
Developers can exploit the sunset clauses by deliberately delaying completing construction of their project, in order to terminate signed contracts of sale, and re-sell the property at a higher price.
The new laws will also:
- Prohibit public auctions of land before 1pm on Anzac Day, bringing the industry into line with the standard restricted business hours for the day
- Strengthen the existing requirement for vendors or real estate agents to disclose material facts about a property, and enable guidelines to detail what a material fact is likely to be (for example, a property’s past history as a clandestine drug laboratory or the site of a homicide)
- Introduce greater protections for people who purchase options to buy land as part of a land banking scheme, including requiring money paid for options to be held in a trust
- Prohibit certain terms contracts and rent-to-buy arrangements, with significant fines and potential jail time for vendors and third-party intermediaries to act as a strong deterrent.
The changes implement key outcomes of the Consumer Property Law Review’s examination of the Sale of Land Act 1962.
The new laws on sunset clauses apply from 23 August 2018 to ensure any existing eligible and future off-the-plan contracts are protected.
Source: Vic Government