So you’ve fought off the competition, saved the pennies, put down the hard earned deposit and now its just time to sit back and wait for that baby to be built! Sure, its going to take a while, buildings do take a bit of time to construct, after all, the glossy brochures say it will be complete around Christmas next year. Plenty of time to save a bit more for the mortgage and with any luck, property prices will go up between now and then. Lucky you locked it in at today’s prices and the conveyancing was a breeze!
2 years later…you as ask your lawyer “what is a notice of rescission exactly”. She points you to somewhere about 40 pages into the contract at around clause 50 thousand odd point 2 (b) with the small heading “sunset date”. Ultimately it reads to the effect that if the building is not complete by the Sunset Date (which just so happens to be defined at page 97), the vendor has the right to rescind. Rescind in this case basically means each party walks away from the contract on the basis of “no blood no foul”. Sure you get your deposit back but you don’t get the property.
In the meantime, the Vendor, kind developer that he is, offers to sell you the property again. Sure you think…until he mentions that it is now $150,000.00 more!
We agree, its not fair. However, in NSW at the moment there is not much you can do about it. Whilst there is anecdotal evidence of an pending change to legislation to protect the purchaser in these circumstances, it has not been implemented to date.
Ultimately, the best protection is to know your rights and factor them into your investment and purchasing decisions. Make sure you ask your lawyer during the conveyancing process what rights the vendor has to rescind or terminate the contract. Whilst a sunset date may assist a purchaser in a falling property market, in a rising market it is only likely to benefit the developer.