What happens to an off the plan
purchase if the building is not completed before the sunset
Let's start by making it clear that a sunset date is not
a romantic meeting. A sunset date is a date that a property
developer inserts into off the plan sale contract by which
they expect the building to be completed and the strata plan
to be registered.
Until 2 November 2015, there were no restrictions on
vendors or purchasers terminating the sale contract if the
building was not completed by the sunset date. But in a
rising property market, some property developers were
delaying completion and were using the sunset clause to
terminate then re-sell at a profit.
In response, the NSW Government introduced a Sunset
Clause Law which requires the vendor in the contract to
obtain permission from the NSW Supreme Court to rescind the
contract. Permission is granted if the court is satisfied
that it is just and equitable in all the circumstances to be
able to rescind.
In only the second case which has been decided under the
Sunset Clause Law, the Court has decided to refuse
permission to the property developer to rescind nine off the
sale contracts in an apartment development in Surry Hills,
The court refused because the purchasers would lose the
benefit of an average increase in value of $200,000 above
the Contract Price and lose the 'lifestyle' choice of moving
in. This was so, even though the property developer was not
wholly to blame for the delay in completing the building
because its builder went into administration.
For more details, click on my case note
Sunset Clause Law bites property
What happens when a purchaser
caveats the property they are buying?
Property vendors are anxious to know what happens when a
purchaser registers a Caveat over the property they are
selling under a Contract for Sale.
They ask: Will the Caveat derail the sale and what
should I do? This is a guide.
First: Why has the purchaser registered a Caveat? If it
is because they have released the deposit to the vendor or
if settlement is deferred beyond the standard time, then it
is perfectly justifiable for a purchaser to register a
Caveat, provided they have been granted a 'caveatable
interest' in the Contract for Sale.
Second: How does the Caveat affect the vendor? Anyone
searching the title will see the Caveat - if they are a
lender, they will not lend more money to the vendor; if they
are another purchaser, they will not enter into a Contract
of Sale with the vendor; unless the Caveat is removed. So a
Caveat restricts the vendor in refinancing or re-selling the
Third: Is there a dispute with the purchaser? If there is
no dispute, then the purchaser is using the Caveat to
legitimately protect their interests, and will come to
settlement with a Withdrawal of Caveat. But if there is a
dispute, the purchaser is using the Caveat as a bargaining
chip against the vendor. If so, the vendor needs to take
Fourth: What action can a vendor take to remove the
caveat? The process is called lapsing the caveat. The vendor
serves a lapsing notice which gives the purchaser 21 days
(in NSW) (14 days in Qld) to apply to the Supreme Court to
maintain the Caveat on the title. If the purchaser does
nothing, the Caveat will be removed from the title by the
Fifth: What happens if the purchaser goes to Court? For a
vendor, the most significant part is that the purchaser must
'proffer an undertaking as to damages' which means that they
accept responsibility to compensate the vendor for all
losses, if the court agrees to maintain the caveat on the
title until the dispute with the vendor is determined by the
In a recent case before the Supreme Court of NSW, the
purchaser applied to maintain their caveat. But when the
moment came, they refused to accept responsibility for
losses the vendor might suffer. As a result, the Court
ordered the Caveat be removed and the purchaser pay the
vendor's legal costs of going to court.
For my case note click
Will a purchaser's caveat stand
without an undertaking as to damages?
The news is all bad for
Timbercorp investors lost their investments when
Timbercorp collapsed in April 2009.
But the investors did not lose their liability to repay
their loans with Timbercorp Finance. The loans remained due
and payable with interest.
For a while, KordaMentha who were appointed receivers of
Timbercorp Finance took no recovery action, as they waited
for an investor class action to be concluded.
Then, when the class action failed, they took recovery
action, but were stayed pending a High Court Appeal which
found that the investors could still defend the recovery
But now, the Supreme Court of Victoria has shut the door
on those defences, and the investors will have no choice but
to pay up or go bankrupt.
For my case note, click
Timbercorp investors have failed in their ‘no loan’ defences
to loan recovery claims
Good news at last for Great
Southern Plantations Investors - Bendigo Bank loan recovery
claims can be beaten!
Not a lot has gone right for investors in the 43
Agricultural Investment Schemes promoted by the Great
Southern Plantations Group between 1998 and 2008.
They invested in timber, beef cattle, wine grapes, almond
and olive projects. Yes, their investment was tax driven -
the money invested was tax deductible immediately. But it
was also an investment - they expected to receive their
money back and good profits on their investment over the 10
to 12 year term of the project.
Many investors used borrowed money to fund their investment.
They took out a loan from Great Southern Finance (another
group company), which then on-sold their loan to the Bendigo
and Adelaide Bank.
Click for more
a caveat good security for an investor in a property
Investors can make good profits by investing in a property
A common situation is a land owner who owns land which is
ripe for subdivision. But they are missing one vital
ingredient - the money - to obtain the approvals and to
carry out the site work.
Click for more
How property developers can profit
from using vendor finance.
Is there some way we can use Vendor Finance by which we can
ensure sales and that both the Vendor and Buyer are happy?
Two Property Developers hit the wall –
after clutching at straws to forestall possession orders on
Property developers are known to use ingenious arguments to
forestall possession orders sought by their lenders, after
the lender calls up the loan.
Click for more
Joint Ventures for Real
Estate Investment and Development
If two people combine their knowledge and their money in
a property venture, they will often achieve more as partners
than they would achieve on their own.
Click for more