Your Rights to Rescission
In 2021, a multitude of Canberrans have been subject to unforeseen contract rescissions for off the plan property purchases.
Put simply, a rescission of contract is when the contract is essentially cancelled by a party under the relevant contract clause, and the parties will no longer take part in the property sale/purchase transaction.
The media has platformed the despair of homebuyers who have lost out on their off the plan purchases, and with many of these purchasers being first home buyers, they are no longer able to access certain Government grants that were available to first home buyers when they exchanged their contracts. Sadly, some of these home buyers have found that the off the plan units that they had exchanged contracts on before having the contracts rescinded, were now being resold for $140,000.00 more than what they had agreed to pay.
In an effort to prevent developers and sellers of off the plan developments rescinding contracts and leaving the purchasers at a loss, the ACT Government introduced the Civil Law (Sale of Residential Property) Amendment Bill 2021 (the Legislation) on 9 November 2021.
The Legislation has been created with consideration given to elements of the New South Wales and Victorian legislation that covers this area of property law. The Legislation will protect the purchaser from unforeseen property purchase contract rescissions that leave them at a loss and sets out that the seller of an off the plan property must give the purchaser notice of intention of rescission in writing, at least 28 days before the proposed rescission. Within this 28-day period, the purchaser can consent to the rescission. Should the purchaser not consent to the rescission, the seller can apply to the Supreme Court of the Australian Capital Territory for an order for the off the plan property purchase contract to be rescinded. The Court must be satisfied that it is just and equitable for the order to be made. Whether the application for an order for the rescission is just and equitable can be determined by considering whether:
- the terms of the off‑the‑plan contract, including whether a term is intended to avoid the operation of this part;
- whether the seller has acted unreasonably or in bad faith;
- whether factors beyond the seller’s reasonable control have affected the seller’s ability to complete the contract or the viability of the seller’s business;
- what reasonable actions the seller has taken to—
- avoid a rescission event; or
- if a rescission event has happened—minimise the effect of the event on the seller’s ability to complete the contract;
- whether there is a reasonable prospect of the seller completing the contract;
- whether the unit or land the subject of the contract has increased in value;
- the effect of the rescission on the buyer;
- whether the buyer has been performing their obligations under the contract;
- the effect of completing the contract on the seller;
- any other matter that the court considers relevant;
- any other matter prescribed by regulation.
The Supreme Court also has the capacity to make any other order it sees fit, including an order for damages to be awarded.
This legislation will be reviewed in two years for the Government to assess how it is supporting the community.
If you or anyone you know has been subject to an unforeseen contract rescission for an off the plan property purchase, please contact our civil law team on 6279 4222 to discuss your options.