Developers can no longer use sunset clauses for financial gain in NSW

Be wary of developers when buying property off-the-plan.

As well as sunset clauses, developers and builders have been known to try to alter the size and shape of apartments, whilst the development is still under construction.

A Recent decision in the NSW Supreme Court has given off-the-plan apartment buyers a major victory over developers, who try to use the sunset clause to renege on the contract.

A Sydney developer recently took 12 of its apartment buyers to court, arguing that it was within its rights to rescind the contracts, due to the development’s problems pushing the completion date, beyond the date of the sunset clause.

The buyers were arguing that the developer was only trying to resell the apartments for a higher price, in a market that was starting to heat up.

This practice is becoming increasingly common in apartment block developments, where developers delay completion and then use sunset clauses, to cancel off-the-plan contracts, so they can resell them a few days later, for a much higher profit.

The court heard that the 12 buyers, had placed deposits on their apartments in 2014 and had been battling the developer, to keep their contracts for 2 years.

The court also heard that the developer had sent a series of cynical letters to the owners, advising them that the size of the units will either shrink or might not even be completed.

An evaluation agent told the court, that the apartments had risen in value by around $200,000 over 4 years each, since they were originally purchased off the plan.

The judge ruled that the developer had not acted justly or equitably in trying to rescind the contracts and dismissed the developer’s bid to tear up the contracts as well as making the developer pay all the legal costs of the 12 apartment buyers.

Reference: Silver Star Fashions Pty Ltd v Dal Broi [2018] NSWSC 1445,


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Marlene Liontis
Sunday, 28 April 2019

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