Property buyers have always faced unexpected challenges. You may find that changes to your employment have resulted in a loss of income, interest rates have risen, or you are in need of a home to move in immediately. These situations might make reaching the settlement of your recent off-the-plan property purchase no longer a practical option. This article will look into how and when a purchaser can withdraw from an off-the-plan contract of sale.
Cooling-off period
Your first opportunity to end the contract is during the cooling-off period. You can give the vendor or the vendor’s agent written notice that you are ending the contract within three clear business days of the day that you sign the contract. You would be entitled to a refund of all the money you paid except for $100 or 0.2% of the purchase price (whichever is greater).
Please note that the cooling-off period does not apply if:
- you bought the off-the-plan property at or within three clear business days before or after a publicly advertised auction;
- the property is used primarily for industrial or commercial purposes;
- the property is more than 20 hectares in size and is used primarily for farming;
- you and the vendor have previously signed a contract for the sale of the same land in substantially the same terms; or
- you are an estate agent or a corporate body.
Subject to finance
If you have added in a clause specifying that the contract is subject to a loan being approved, you may end the contract if finance approval is not obtained by the date allowed by the vendor.
You may terminate the contract if the loan is not approved by the approval date, but only if you:
- immediately applied for the loan;
- did everything reasonably required to obtain approval of the loan;
- serve written notice ending the contract on the vendor within two clear business days after the approval date or any later date allowed by the vendor; and
- are not in default under any other condition of this contract when the notice is given.
All money must be immediately refunded to you if the contract is terminated in this way.
Sunset clause
Every off-the-plan contract has what is called a ‘sunset clause’. In a nutshell, it is a time limit by which the developer must finish the project. If the project is not complete by that time, the purchaser can walk away from the contract. Typically, sunset clauses are 24-48 months, however it can be longer depending on the project.
Purchasers terminating the contract by the end of a sunset clause will receive a refund of all their deposit already paid.
Deed of cancellation
If the contract is not terminated within any of the above timeframes, a contract may be ended if the purchaser and the vendor have agreed to cancel and have signed a deed of cancellation. The signed deed states that the parties mutually release each other from all claims and actions arising under the contract as and from the effective date. Be mindful that the vendor may consider termination by a deed of cancellation as a default under the contract, and you may be required to forfeit your deposit.
Feel free to contact us if you have any questions about your off-the-plan contract. Get in touch via email or phone: hello@wlegalgroup.com.au or +61 3 9590 6180.
