“Off the plan” Contracts and the new Sale of Land (Rights and Duties of Parties) Bill

William Forster Chambers & the Law Society of the NT

Alistair Wyvill SCVince Peters

Litigating “Off the Plan” Contracts

Remedies under contract

Remedies under the TPA/CAFTA

Contract - context

Property subject to the contract does not yet exist

Control over the creation of the property is with vendor only

Knowledge of the nature of the property is principally with the vendor

Section 26K of Unit Titles Act

(1)Each contract entered into by a developer for the sale of a unit, proposed unit or other interest in a condominium development... shall..., be deemed to be subject to the condition that the developer will construct and complete the condominium development in accordance with the disclosure statement, and each successor in title to a unit or interest so sold shall be deemed to be the original purchaser from or contractor with the developer and may enforce the contract accordingly.

(2)A person is incapable of contracting out of the effect of subsection (1).

See also s.26ZA (estate developments)

Disclosure Notice

Plans of areas including common areas

“schedule of materials and finishes”

Commencement and completion dates

Grounds for avoiding contract.

Misrepresentation - fraudulent, negligent, innocent

Failure of a condition Subject to finance, etc: Parland (1995) 5 Tas R

121 Notice requirements: Chin v Frances Park

Breach of condition Disclosure statement Breach of “conditions” of the contract

Repudiation

Remedies

o Terms of agreemento Election between inconsistent remedieso Specific performance

o vendoro purchaser

o Forfeiture of deposit/bank guaranteeso Damages

TPA/CAFTA

Types of misrepresentation Existing fact Future matter – reasonable grounds: s.51A Statement of intention Opinion (as to existing fact or future

matter)a positive unqualified prediction may be misleading if relevant circumstances show a need for some qualification to be attached or the possibility of non-fulfillment to be disclosed as a requirement of fair tradingWheeler Grace (1989) ATPR 40-940

TPA/CAFTA

Types of misrepresentation – off the plan contracts

attributes of property when constructed – size/quality present fact/future matter/intention?

market conditions: Henville v Walker (2001) 206 CLR 459 current value of “the property” number and value of comparative sales value when completed rentability

Effect of exclusions/limitations in contract

Conduct must be considered as a whole Entire agreement clauses – do not exclude

misrepresentation claims as such: Inntrepreneur [2000] 2 Lloyds Rep 611

No reliance on any representations not included in contract: “evidentiary estoppel”

“purchaser should make own enquiries” clause: Butcher v Lachlan Elder (2004) 218 CLR 592

SALE OF LAND (RIGHTS & DUTIES OF PARTIES) BILLSALE OF LAND (RIGHTS & DUTIES OF PARTIES) BILL

DISCLOSURE STATEMENT

COOLING OFF PERIOD

DISCLOSURE STATEMENT

COOLING OFF PERIOD

COMPENSATION

Person who prepares document is liable to compensate buyer if document is misleading or prepared without exercise of reasonable skill and care.

Section 24

Person who prepares document is liable to compensate buyer if document is misleading or prepared without exercise of reasonable skill and care.

Section 24

SECTION 3-DEFINITIONS

Encumbrance Land Lot Required Certificate Required Document Required Report Residential Property

Encumbrance Land Lot Required Certificate Required Document Required Report Residential Property

REQUIRED CONTENT

Proposed Contract Title Search Particulars of registered and

unregistered encumbrances All registered documents pertaining

to an existing unit on a Unit Plan Certificates required by regulation

Proposed Contract Title Search Particulars of registered and

unregistered encumbrances All registered documents pertaining

to an existing unit on a Unit Plan Certificates required by regulation

Criminal Code Applies

Be wary of recklessly or carelessly preparing the document.

Be wary of recklessly or carelessly preparing the document.

PENALTIES

100 penalty units for failure to provide the disclosure document or not taking care to ensure its provision

100 penalty units for failure to provide the disclosure document or not taking care to ensure its provision

Exemptions

Unit or Lot to be created Related party transactions Joint tenants and tenants in

common Exercise of option longer than 60

days

Unit or Lot to be created Related party transactions Joint tenants and tenants in

common Exercise of option longer than 60

days

WHEN REQUIRED

When property is offered for sale When property is offered for sale

BUYER MAY RESCIND

If no disclosure If disclosure contains error or

omission of material particulars Rescission at no cost to Buyer-full

deposit refund No commission or expenses payable

by Seller Buyer may rescind or complete and

pay damages

If no disclosure If disclosure contains error or

omission of material particulars Rescission at no cost to Buyer-full

deposit refund No commission or expenses payable

by Seller Buyer may rescind or complete and

pay damages

PRACTICAL IMPLICATIONS

Instruction Sheets Professional Indemnity Marketing tool Real Estate Agents

Instruction Sheets Professional Indemnity Marketing tool Real Estate Agents

COOLING OFFCOOLING OFF

4 Day cooling off period Starts day after contract signed Applies only to residential property

not sold by tender or auction or sold within 4 days before or 2 days after auction

4 Day cooling off period Starts day after contract signed Applies only to residential property

not sold by tender or auction or sold within 4 days before or 2 days after auction

CERTIFICATES

To waive or shorten cooling off period

Given by legal practitioner or licensed conveyancing agent

Format required by Section 21

To waive or shorten cooling off period

Given by legal practitioner or licensed conveyancing agent

Format required by Section 21

RESCISSION NOTICE

Must be given during the cooling off period

No cost to buyer No commission to sellers agent Can be signed by buyer or buyer’s

legal practitioner or conveyancing agent

Can be given to seller or seller’s legal practitioner or conveyancing agent

Must be given during the cooling off period

No cost to buyer No commission to sellers agent Can be signed by buyer or buyer’s

legal practitioner or conveyancing agent

Can be given to seller or seller’s legal practitioner or conveyancing agent

TRANSITIONAL PROVISIONS

Does not apply to listings made within 6 months prior to Act commencing AND if contract within 6 months after Act commences

Does not apply to listings made within 6 months prior to Act commencing AND if contract within 6 months after Act commences

Conclusion and Questions