Off the plan Contracts and the new Sale

“Off the plan” Contracts and the new Sale of Land (Rights and Duties of Parties) Bill Alistair Wyvill SC Vince Peters William Forster Chambers & the Law Society of the NT

Litigating “Off the Plan” Contracts v Remedies under contract under the TPA/CAFTA

Contract - context l Property subject to the contract does not yet exist l Control over the creation of the property is with vendor only l Knowledge of the nature of the property is principally with the vendor

Section 26 K 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. 26 ZA (estate developments)

Disclosure Notice l l l Plans of areas including common areas “schedule of materials and finishes” Commencement and completion dates

Grounds for avoiding contract. l l Misrepresentation - fraudulent, negligent, innocent Failure of a condition ¡ ¡ l Breach of condition ¡ ¡ l Subject to finance, etc: Parland (1995) 5 Tas R 121 Notice requirements: Chin v Frances Park Disclosure statement Breach of “conditions” of the contract Repudiation

Remedies Terms of agreement Election between inconsistent remedies Specific performance o o o o vendor purchaser Forfeiture of deposit/bank guarantees Damages

TPA/CAFTA Types of misrepresentation q Existing fact q Future matter – reasonable grounds: s. 51 A q Statement of intention q 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 nonfulfillment to be disclosed as a requirement of fair trading Wheeler Grace (1989) ATPR 40 -940

TPA/CAFTA Types of misrepresentation – off the plan contracts q attributes of property when constructed – size/quality present fact/future matter/intention? q market conditions: Henville v Walker (2001) 206 CLR 459 q q current value of “the property” number and value of comparative sales value when completed rentability

Effect of exclusions/limitations in contract q q 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) BILL 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 ¡

SECTION 3 -DEFINITIONS 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 ¡

Criminal Code Applies ¡ 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

Exemptions 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

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 ¡

PRACTICAL IMPLICATIONS Instruction Sheets ¡ Professional Indemnity ¡ Marketing tool ¡ Real Estate Agents ¡

COOLING 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 ¡

CERTIFICATES 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 ¡

TRANSITIONAL PROVISIONS ¡ 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