- I purchased a property off the plan in 2003 which was supposed to have settled in April 2004. Year after year the construction has been delayed and we have received requests for the strata scheme to be extended.
I recently received two letters on the same day but dated weeks apart; one asking to extend the scheme – but good news values have increased by 35% and the second saying that the contract was being cancelled, a cheque for the deposit is in the mail. I did receive the deposit back with 2.5% interest p.a. which I am not happy about. They even had the hide to charge an admin fee.
My unit along with the rest in this stage of the development (approx 20) is back on the market for 35% more than the original contract price.
So far I am getting no where with the developers and my Conveyancer is choosing to ignore my emails and phone messages.
Do I have a leg to stand on in trying to obtain proper interest for my deposit or having the contract reinstated? Can they really cancel the contracts and then resell the units at a higher price? The units are for sale on the interment and it is obvious what they have done.
I would appreciate any advice or suggestions on what to do next.This is very common with off the plan developments. Developers structure contracts to favour themselves.
The developer will cancel contracts with the purchasers if they think they can get a higher price on the open market when settlement time comes near. It is called the "sunset clause" in the industry.
Read your contract carefully and I think you will find they are within their legal rights to do this unfortunately.
Next time delete the sunset clause from the contract.
If it was a standard residential contract or option to purchase contract, it cannot be cancelled!
If you signed a contract with a clause givng them an escape route then you gave them the right to get out!
The contract was cancelled pusuant to Clause 7.3 in the contract.
7.3 Reads Termination – If the conditions precendent in clause 7.1 are not satisfied by the scheme date, the seller or, subject to clause 7.2, the buyer may terminate this contract by notice in writing to the other party.
7.1 Reads Preconditions – The following are conditions precedent to settlement of this contract
i) the local government issuing a certificate of classificationn or other approval required for the building to allow legal occupancy of the lot and
ii) the seller establishing the scheme.They haven't identified which part of the clause, but construction is underway and they have obviously re-registered the scheme as they are re-selling the units. The scheme has in fact been extended before.
What does anyone think about that?
Hello IJO
Why don't you go to a good lawyer for advise. I would.
Good luck
ElkaYes, this is common. Your solicitor should have warned you about this before you exchanged. If not settled, or certain certificates issued by a certain date, then one or either party can back out.
Some developers have been know to go slow when they know prices have risen just so they can take the properties back and resell them at a higher price.
It works the other way too. I rescinded a contract a few years ago because the unit went down in value and the developer was slow.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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