Tag: Buy Property

New legal protections for off the plan property purchasers

Proposed amendments to the Conveyancing Act 1919 will be a welcome change to purchasers buying properties off the plan, who are otherwise plagued with risk and uncertainty.

Off the plan contracts

An off the plan contract is a contract for the sale of a property in a new subdivision that does not have a separate title at the time the contract is entered into. Often the construction of the property will not be complete, but developers will pre-sell the vacant lots or units.

Sunset clauses

Usually, the contract will be conditional upon the property being registered by a certain date (referred to as the “sunset date”). If the property is not registered by the sunset date, then the contract will allow either the buyer or the seller to rescind the contract (referred to as a “sunset clause”).

Recently, sunset clauses have been the subject of some controversy due to reports of developers deliberately delaying a project, so that the sunset clause can be exercised. The developer rescinds the contract, refunds the deposit and resells the property at a higher price than what was contracted with the original purchaser. While the purchaser gets their deposit back, they are not entitled to any compensation. Such action, while somewhat unfair, is entirely legal under the current laws, as parties are free to negotiate the terms of an off the plan contract (which are usually weighted heavily in favour of the developer).

Proposals for change – Conveyancing Amendment (Sunset Clauses) Bill 2015 (NSW)

The Conveyancing Amendment (Sunset Clauses) Bill 2015 (NSW) was introduced into the NSW Parliament Legislative Assembly on 10 November 2015. The Bill will introduce a new Division 10 of the Conveyancing Act 1919 to prevent sellers from unreasonably rescinding off the plan contracts for a residential lot* under a sunset clause.

The seller may only rescind the contract if:

  1. the seller gives the purchaser a notice in writing at least 28 days prior to rescission under a sunset clause. The notice must state why the seller is proposing to rescind and give reasons for the delay; and
  2. the purchaser gives written consent to the vendor’s proposed rescission; or
  3. the vendor obtains an order from the Supreme Court permitting the rescission; or
  4. the reason for the rescission comes within a category prescribed by the Regulations (no Regulations have yet been made).

Should the seller approach the Supreme Court, it must convince the Court that rescission of the contract is just and equitable in all the circumstances.  The Court will consider the following:

  • the terms of the contract;
  • whether the vendor has acted unreasonably or in bad faith;
  • the reason for the delay;
  • whether the subject lot has increased in value;
  • any other matter the court considers to be relevant.

If the seller is unsuccessful, the seller must pay the purchaser’s costs of the application to the Supreme Court.

Application of the new provisions

The proposed amendments will apply to existing contracts and any rescission by a vendor on or after 2 November 2015.

What’s next

We would expect the Bill to be debated shortly and perhaps some minor amendments made to clarify some provisions.

* “residential property” has the same meaning that it does in s 66Q of the Conveyancing Act 1919

Sebastian and Genevieve are experienced property lawyers who have both acted on numerous off the plan sales and purchases. Contact Trouncer Legal today by phoning (02) 9481 9800, emailing admin@trouncerlegal.com or by filling out our contact form here.

When to buy and Sell Property

Everyone knows that property prices move in cycles, and of course it would be great to sell at the top of the cycle, or buy at the bottom. The trouble is, it’s very hard to pick the top and bottom of the market, even for the experts. If you’re looking to move from one house to another at the same time, it may not matter quite as much, because in general terms house prices may all move up or down together. However, that assumes you are buying in the same area, and in a similar price bracket.

That’s not to say that some people don’t make a lot of money, either by good management or good fortune. If you can buy cheaply at the bottom of a cycle, and sell at the top of a later cycle, you can do very well. Or you may sell at the top of a cycle, rent for a year or two, and get more for your money in a buyer’s market later.

On the other hand, things can change pretty fast in the market, and it is unwise to gamble with the family home. In the past, many families have sold up in Sydney, and moved to Queensland for a better life. After a few years when things haven’t worked out, they have wanted to return. But they have often found they couldn’t afford to buy back into the Sydney market. The same thing can happen to you while you rent.

The Sydney market may have been quiet for the past few years, and you may read that we are in for a period of low inflation. However, Sydney is still the leading real estate market in Australia, and is notorious for a sudden burst of price rises when conditions are right. If you are caught renting at the wrong time, it could be very, very costly.

You may think that it is fairly easy to pick the top and bottom of a cycle. Simply read the papers, keep an eye on things, and it will be obvious. I don’t think so (we would all be rich otherwise), and I think it is getting more difficult as Sydney becomes larger and more cosmopolitan. Here are some factors that I think you should bear in mind:

  •  There are more and more “markets” within the Sydney region. Prices for inner city units may be booming, while houses in the south-west may be static. Even in the same area, houses above $500,000.00 may be selling well, while houses under $250,000.00 may be selling slowly.
  • There is a greater range of housing. The standard quarter acre block has given way to a multitude of villas, townhouses, units and so on. Again, this means you need to be more careful when assessing price movements.
  • Remember that all markets are affected by supply and demand. Your local agent may say that sales in the last few months have been great, but this doesn’t mean that prices have been increasing at all. Conversely, if the local agent is quiet because he or she simply doesn’t have any decent houses to show you at all, this may be a signal that supply is tight, and prices will rise if the demand it there.
  • The information age in which we live means that there is a wealth of information, statistics and other material being produced all the time. The trouble is that statistics can be interpreted and manipulated forever, and at any one time there will be numerous economists, consultants, real estate experts and others predicting rising prices, and at the same time there will be others predicting quite the reverse.

The best advice is to remember that real estate should be a long term investment, not a short term gamble. It is true that prices tend to rise with inflation over time, but don’t ignore the fact that property values can also fall. The costs of buying and selling property mean that short-term “gain” is often illusory. Look at this simple example, where someone plans to buy a bargain for $600,000.00, and sell it quickly for $675,000.00, obtaining a loan of $500,000.00. For the sake of simplicity, assume it is too difficult to rent the property in the proposed time frame of 4 months.


Price:                                                   $ 600,000.00


Stamp duty house:                                  20,510.00

Loan fees:                                                     350.00

Valuation fees etc.                                        600.00

Legal costs:                                               1,600.00

Building/pest report:                                     500.00

Interest on loan @

8% for 6 months:                                    20,000.00

TOTAL:                                              $ 643,560.00


Price:                                                   $ 675,000.00


Agent’s selling fee

@ 2.5%:                                                 16,875.00

Auction expenses:                                     1,500.00

Discharge of loan fee:                                   650.00

Legal expenses:                                        1,500.00

TOTAL:                                                 654,475.00

Purchase costs:                                    (643,560.00)

“PROFIT”:                                            $ 10,915.00

The above example is, of course, over simplified, but time and time again people get caught into thinking that properties will sell faster and easier than they do in practice, and it is the holding costs that are the killer. You may say a $10,000.00 gain is better than nothing, but remember there may also be capital gains tax, renovation costs and time and effort spent on the property. It all adds up to taking a major risk for little or no return.


Sebastian Trouncer is the founding partner of Trouncer Legal and has over 35 years experience in property law. Contact Sebastian today to discuss your sale or purchase by phoning (02) 9481 9800, emailing admin@trouncerlegal.com or filling out our contact form here.