ACT Attorney-General Shane Rattenbury has announced new legislation will come into effect on Tuesday (9 November) which will make it more difficult for developers to rescind or cancel sales.
He said the new legislation will better protect home buyers and will be designed to cover broader delay events, rather than just targeting sunset clauses.
“(We want to) make sure that we remove the opportunity for sellers or developers to go down the unconscionable path where they might be seen to try and take advantage of a rising market,” Mr Rattenbury told the ABC.
“The Supreme Court will be required to consider factors such as, for example, a developer has not been able to get development approval, there has been significant increase in costs for materials or other delay provisions that are reasonable. But they will also need to make sure the potential buyer is not being taken advantage of.”
The new legislation will not be retrospective, and any legal costs will need to be paid by developers.
The long-awaited legislation follows commencement of a class action last month by a group of off-the-plan buyers in the ACT whose contracts were rescinded by the 3 Property Group (3PG) due to a sunset clause, causing them to lose their home deals.
The sunset clause allowed either party to retreat from the contract, making it perfectly legal for the developer to rescind their sales, effectively ousting dozens of potential first-time buyers from the housing market.
Buyers were allegedly told by 3PG that the cancellation of their contracts had been caused by “delays and matters outside of their control”.
On 21 October, 3PG released comments on their social media page stating their company had been “blasted by unfortunate events”.
“Contracts provide, among other things, protection so that development is not destroyed by items such as the increased costs which are a commercial reality. It has been a hard few years, and it is easy to see builders and developers as faceless corporate entities to blame,” the post said.
“There are always contractual and legal issues that are better resolved through the courts, or through productive discussions with purchasers rather than the latter [sic] and, of course, the media. 3PG supports all laws and law reforms provided that all affected parties are considered on an equitable basis rather than an inequitable basis as appears to be purported in this article [The Canberra Times] with respect to 3PG.”
They added that they “definitely acknowledge that there are serious issues for both sides here”.
ACT Attorney-General Shane Rattenbury told the ABC on 11 October that he viewed the actions of 3 Property Group as “unconscionable” and the clause used by developers was “very concerning”.
“I have asked my Directorate to urgently look at this section of the law, to look at the provisions that exist in NSW and Victoria which do mitigate against circumstances where developers seek to use this to their benefit rather than perhaps the way these clauses have been traditionally used, which has been seen to be more mutually beneficial,” he told the ABC.
“There is always potential, as with all contracts, for people to take advantage of another party, and I am focused on mitigating that and ensuring there is no potential power imbalance between a developer and a buyer.”
Numerous complaints relating to 3 Property Group have been brought to the attention of Mr Rattenbury’s office.
“Until very recently there have been almost no examples of this in the ACT,” he told the ABC.
“In recent months we are aware of one company, for which I have received a number of complaints, and it does just seem to be the one company at this point in time.”
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