New Laws To Off-The-Plan Contract Will Commence on 1 December 2019

The new laws will start from 1 December 2019 and it will apply to off-the-plan contracts. An off-the-plan contract is defined to mean a contract for the sale of a residential lot that has not been created at the time the contract is entered into.

The new laws require Vendors to make additional disclosures to purchasers to protect purchasers and give them new remedies when they buy property off-the-plan.

The Reason Of The Introduction Of The New Laws

In November 2018, the Government approved the Conveyancing Legislation (Amendment) Act 2019 in response to community concerns about the vulnerability of off-the-plan purchasers because purchasers were unable to physically inspect the property sold to them off-the-plan and this might restrict their use and enjoyment of the property after completion of the constructions of the property. The legislation creates a more transparent contractual process, setting minimum standards of disclosure and providing statutory remedies where the final property differs from what was promised.

The New Laws Are As Follows:

1. New disclosure requirements: Disclosure Statement and draft documents to be attached to the contract.
2. Vendors to notify purchasers of major changes to the property.
3. Purchasers can cancel contracts or claim damages for major changes to the property.
4. 10-Business-Day cooling-off period for off-the-plan contracts.
5. Vendors must provide Purchasers with the registered plans 21 days before settlement.
6. Deposit to be held in trust.
7. Stronger sunset conditions protections.

Disclosure Statement And Draft Documents To Be Attached To The Contract

Vendors will have to attach a Disclosure Statement to the contract. The Disclosure Statement must include a draft plan, the Sunset Date and other draft documents must also be provided such as any proposed schedule of finishes, dealings, easements, strata by laws and strata development agreements.

What Happens If The Vendor Does Not Attach The Disclosure Statement To The Contract?

Purchasers can rescind the contract within 14 days of exchange.

Vendors To Notify Purchasers Of Major Changes To The Property

Vendors in off-the-plan contracts must construct the property in accordance with the approved plans and specifications that attached to the Disclosure Statement. However, sometimes Vendors vary the property during the construction of the property, and this results in major variations that materially and adversely affect the property. The new laws requires vendors to notify purchasers of variations that make what was disclosed inaccurate in a ‘material particular’. These are changes that will adversely affect the use or enjoyment of the property being sold, and may include changes to:

• The draft plan
• By-laws
• Schedule of finishes
• Easements of covenants
• A strata management statement or building management statement
• A management statement for a community, precinct or neighbourhood scheme
• A development contract or strata development contract

The words “material particular” means that “the purchaser would not have entered into the contract had the purchaser been aware of the inaccuracy”.

What Happens If The Vendor Makes A Major Change To The Property?

Purchasers will can either cancel the contract for sale or remain in the contract but claim compensation (up to 2% of the purchase price). If the parties cannot agree to resolve a compensation claim, the claim can be referred to arbitration. The arbitrator’s decision is final, and the purchaser is no longer able to cancel the contract.

10-Business-Day Cooling-Off Period For Off-The-Plan Contracts

The new laws extend the cooling off period for off-the-plan contracts from 5 business days to 10 business days. The cooling off period for contracts relating to registered properties does not change.

Vendors Must Provide Purchasers with the Registered Plans 21 Days Before Settlement

Vendors will have to provide purchasers with a copy of the final registered plan at least 21 days before settlement. Purchasers cannot be requested to settle within that 21 day period.

Deposit To Be Held In Trust

The deposit under the contract must be retained by the stakeholder in a trust or controlled money account during the contract period. These monies cannot be released to the vendor before settlement. The new requirement will ensure deposit and installment monies are protected in the event of the developer’s insolvency.

Stronger Sunset Clause Protections

In 2015, the Government introduced laws preventing Vendors from using sunset clauses to end contracts without an order from the Supreme Court (unless the purchaser agrees). Sunset clauses allow either party to terminate an off-the-plan contract should a certain event, like the registration of the plan, not occur by a specified date.
The new laws now extend the definition of a sunset clause to include other events which allows termination of the contract, like the issue of an occupation certificate. The new laws also confirm that the Court can award damages if the vendor is permitted to end the contract under a sunset clause.

Moving Forward

Vendors must be aware of the new laws and regulations and must update their off-the-plan contracts to comply with the new laws to ensure that they are not in breach of the new laws and to ensure that when they make a sale they do not lose a purchaser as result of using the incorrect contract for sale.


Optimum Lawyers is up to date with the new laws and regulations and can help you with all your conveyancing and legal work. We are registered with PEXA and is able to exchange and complete your conveyance electronically, whether you are a Vendor or a Purchaser. We have already exchanged and settled many matters electronically in NSW, QLD and VIC.

We are here to help and are more than happy to answer any questions you have about the introduction of the new laws or conveyancing in general. If you would like to know more about what the new laws for NSW off-the-plan contracts would mean for you at your next property sale or purchase, please feel free to contact us today.