In response to media pressure, in late 2015 the NSW government changed the law to restrict developers from using ‘sunset’ clauses in off-the-plan contracts to benefit themselves. A sunset clause is where a developer is entitled to rescind the contract for sale because (generally) the registration of the strata plan contemplated by the contract had not been completed by a specified date. Some developers had attracted notoriety by using their rights to rescind a contract for sale of land under the sunset provisions to take advantage of substantial increase in the value of developed properties and resell the property to new buyers at higher prices.
Parliament inserted Section 66ZL into the Conveyancing Act 1919. That section prevents a developer from rescinding unless the purchaser consents or the Supreme Court permits them to do so. The court will permit them if the rescission is “just and equitable in all the circumstances” and a wide ranging list of factors are listed for the court to consider.
If you are asked to consent to the rescission of an off-the-plan contract by a developer you should immediately seek legal advice.