Residential 'off the plan' sunset clauses legislation

The Sale of Land Act Amendment Act 2019 (Vic) (the amending Act) introduced several important consumer reforms to the Sale of Land Act 1962 (Vic) (the SL Act). The amending Act makes amendments to the operation of sunset clauses in residential off the plan sales contracts (ROTP contracts).

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Sunset clauses in residential off the plan sales contracts are governed by provisions in the Sale of Land Act 1962 (Vic).

The legislation prevents a vendor rescinding ROTP contracts based on a sunset clause without:

The ‘notice’ and ‘consent’ provisions apply to sunset clauses in all ROTP contracts from 23 August 2018

Sunset clauses in contracts from 23 August 2018 purporting to provide for automatic rescission will be taken to be substituted by the new requirements.

Sunset clauses

A sunset clause is a provision in a ROTP contract that provides for the contract to be rescinded if the relevant plan of subdivision has not been registered or occupancy permit has not been issued by the nominated sunset date.

The amending Act introduced five provisions into the SL Act for regulating sunset clauses in ROTP contracts to prevent a vendor from unjustly rescinding such contracts.

  1. Section 10A
    A sunset clause in a ROTP contract on foot at 23 August 2018 that purports to automatically rescind the contract on the part of the vendor will be taken to permit the contract to be rescinded only in accordance with new sections 10B – 10E.
  2. Section 10B
    Section 10B prohibits a vendor from rescinding a ROTP contract under a sunset clause unless the writtenconsent of each purchaser to the rescission has been obtained and each purchaser has been given at least 28 days’ written notice before the proposed rescission.
    The notice must specify:
  3. Section 10C
    Any attempt to contract out of sections 10A and 10B will be of no effect.
  4. Section 10D
    Any attempt to rescind an off the plan contract in contravention of the above provisions will be taken to be a breach of the contract. This entitles the purchaser to take all contractual remedies available to them for a breach of contract such as issue a default notice and rescind the contract and claim damages.
  5. Section 10E
    A vendor can apply to the Supreme Court for an order permitting rescission of a ROTP contract under a sunset clause if it is just and equitable in the circumstances. Section 10E details matters the court must take into account when determining whether it is just and equitable to order rescission of the contract.
  6. Section 10F
    All new ROTP contracts entered into after 1 March 2020 (proclamation of the amending Act) must include a statement that:
    Failure to provide the statement in the contract will expose the vendor to a penalty under the SL Act.

Other legislative changes in the amending Act

The amending Act also contained other significant consumer reforms including:

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