What is an Off The Plan Contract?
In New South Wales, it is common practice that properties are advertised and sold before the building has been constructed. This is known as purchasing a property ‘Off The Plan’.
Purchasing a property ‘Off The Plan’ means that the Purchaser is purchasing the property based on the drawing and blueprints of the property, without the property actually existing yet.
The law states that once a contract is entered into, it is binding on both parties and cannot be terminated. However, there may be some grounds for a purchase to terminate an Off The Plan Contract.
The property must be built pursuant to the contract within a specified period. This period is known as a ‘Sunset Period’.
In the event that this period expires, the Owner or Developer may normally extend that period to an additional and reasonable period to allow the Owner or Developer to complete the construction of the property.
However, if the extended period is expired, or there is no reasonable ground for the Owner or Developer to extend the Sunset Period, the Purchaser may terminate the contract.
How to Terminate the Contract?
In order for a Purchaser to terminate an Off The Plan contract, the Purchaser must serve on the Owner of the property a Notice of Rescission of a Contract.
The Notice of Rescission of a Contract must be done in the appropriate form.
However, a Notice where the form is defective may be considered to be unenforceable.
Further, a Notice must also contain the appropriate content. That is, the Notice must clearly identify the contract and the parties to the contract. Further, the Notice must expressly refer to the provision of the contract which allows the purchaser to rescind (that is, cancel) the contract.
Lastly, the Notice must be served on the owner using the appropriate method. If the Notice is sent to the owner by a simple email, this may not be deemed as acceptance service of the Notice and the Owner will be deemed to have never received the Notice. Therefore, a Notice must be served in accordance with the instructions of the contract. If the contract does not expressly state the method of service, the Notice must be served on the Owner in person.
Disputing the Notice of Rescission of a Contract
The Owner may dispute the rescission of a contract. In the event that such dispute takes place, the matter may proceed before Court in order to consider whether the Purchaser has a right to rescind (that is, cancel) a contract, and whether the Owner has a right to dispute it.
If you require assistance with respect to rescission of a contract, or wish to dispute a rescission, contact our office for a consultation.