Sunset clause AG warning
ATTORNEY-GENERAL Shannon Fentiman has warned property buyers to be wary of contracts including socalled sunset clauses after controversy over their use at a Gold Coast development.
The Bulletin last month revealed how Metacap Developments had used a sunset clause to tear up contracts of firsthome buyers to buy land at the Hillview Estate in Maudsland.
The clause can legally be invoked by buyers or vendors if settlement is not achieved 18 months after signing.
Distraught purchasers said it left them tens of thousands out of pocket due to sharp Gold Coast property price rises in 18 months since signing deals. Some had paid deposits to builders and other suppliers.
Queensland law doesn’t prohibit such clauses.
“I can appreciate the disappointment for buyers if a seller terminates an ‘off the plan’ sales contract,” Ms Fentiman said. “The government is monitoring (it) and responses recently adopted by other (states).
“‘Sunset clauses’ are not part of the standard REIQ approved contract. For this reason I strongly encourage anyone considering buying residential property to obtain independent legal advice before signing a contract, especially when a contract includes added conditions.
“The Office of Fair Trading (OFT) will continue to advise Qld consumers to carefully read terms of their contracts and be aware of what they are signing when purchasing.
“I’ve asked the OFT to raise consumers’ awareness about this to ensure more Queenslanders are protected when entering into contracts of this nature.”
Sunset clauses are restricted in NSW and Victoria.
Theodore MP Mark Boothman in December wrote to Ms Fentiman asking legislation be amended in line with NSW.
“In 2015 the NSW Government made legislative changes to the NSW Conveyancing Act 1919 that require a purchaser to give consent in writing to the recession of a contract,” he wrote.
“Additionally, it gives the vendor the ability to obtain an order of the Supreme Court to rescind the contract, providing protections to both stakeholders.
“Recently this legislation has been tested in the NSW Supreme Court ... Justice Rowan Drake ruled in the case the developer did not act equitably in seeking to rescind contracts and dismissed the developer’s bid to tear up off the plan contracts.
“Justice Drake also ordered the developer to pay legal costs of all buyers involved.”
Mr Boothman has not yet had a response from Ms Fentiman. He is sponsoring a petition by local residents in support of law changes.
It was “overdue”, he said: “Queensland buyers are just seeking similar protections our southern home buyers enjoy.”
In letters to Hillview Estate buyers saying their contracts were being cancelled, Metacap Developments said it had suffered unexpected delays caused by rain, presence of rock and council approval issues. Council denies responsibility for delays. In response to an update request, Cr Peter Young, the Executive Coordinator Contributed Assets and Development Compliance said “nothing” had changed since December.
Metacap did not respond.