There has been a series of instances of developers exercising their rights to rescind contracts under ‘sunset’ provisions – the NSW state government moved to tighten guidelines restricting the ‘out clauses’ and were duly reinforced by the NSW Supreme Court’s first common law ruling under the new legislation.
Sunset provisions are included in the contract to essentially protect both vendor and buyer from being potentially locked into an agreement. In principle, the notion of a sunset clause seems reasonable; however certain cases involving developers exercising their rights to rescind following delays in completion have received waves of negative press of late. In particular, the Kaymet Corporation development in Wolli Creek and the Samadi Developments project in Surry Hills (who has just gone into liquidation).
I wonder how long it might take for some clever legal minds to devise some form of off plan ‘put and call’ style of agreement that operates outside of the Conveyancing Act and therefore may be drafted to essentially re-instate a form of sunset provision.
Or developers may simply factor in an additional margin of risk as insurance against unforeseen negative circumstances – that is that off the plan sale prices may simply become more expensive under the Sunset Clauses Law.
This article originally published by Elite Agent Magazine.