Developers

NSW Supreme court rules against sunset date clause in a landmark win for buyers.

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Off-the-plan buyers today won a massive victory in a landmark Supreme Court judgement and major test of new legislation to protect property purchasers.

A developer purported to terminate 12 off the plan contracts in a a new building in Surry Hills.  The developer argued that it was entitled to rescind the buyers contracts because of numerous problems with the development, meant completion of the project pushed the completion beyond the sunset clause dates in the contract, therefore entitling the developer to rescind the contract.

The purchasers took action against the developer because they believed the developer was merely trying to cancel their contracts so the developer could obtain a higher price in an increasing market.

Justice Rowan Darke on Wednesday ruled the developer had not acted justly or equitably in trying to rescind the contracts. He dismissed the developer’s plan to rescind up the contracts, and the purchaser’s were permitted to complete their purchase.  This is the first case to test the new laws that was introduced by the government significant changes to the legislation to protect buyers against developers trying to enact sunset clawbacks to increase their profits.

Read the full story on Domain here.

For further information and property law advice, please contact:

Adriana Care
Partner
info@couttslegal.com.au
1300 268 887

 

 

 

What is a Put and Call Option?

A Put and Call Option is an agreement, usually between a landowner and a Builder. The agreement allows the landowner to allocate certain blocks to the Builder for their exclusive right to sell to third parties, for an ‘option fee’. The benefit to the landowner is that they have a guaranteed sale because even if the Builder doesn’t find a third party, the ‘put’ option allows them to make the Builder purchase the lot. The benefit to the Builder is that they get to package the land up as a house and land package, guaranteeing their build on that block of land. The risk to the Builder is that if they do not find a third party to purchase the block of land, they are required to.

There is also such thing as just a Call Option. The difference here is that the landowner no longer has the option to require the Builder purchase the lot however if the Builder doesn’t nominate a third party to purchase the lot, they may forfeit their option fee.

Option Deeds entered into between landowners and Builders include certain terms and conditions. Usually the most crucial is the Call Option expiry date. The Call Option expiry date is the latest date that the Builder has to nominate a third party to purchase the land. In most cases, in order to nominate a third party purchaser to purchase the land, the Builder must ensure that a both building and land contracts have been entered into by the Call Option expiry date.

If you would like advice on Put and Call Option deeds please contact Melina Costantino, expert in Conveyancing for Builders and Developers at Coutts Solicitors & Conveyancers.