TAS Off the plan contract

[Constance A]

Hi,
Just looking for some advice.

If a contract states the following:

4.3 In the event that clauses 4.1(a), (b) and (c) have not been satisfied by the
Sunset Date (or as varied by clause 4.4), then the Purchaser may terminate
this Agreement and the deposit will be refunded by the Vendor to the Purchaser
but the Purchaser will not be entitled to any other compensation.

Is the Vendor able to terminate the contract, or as the wording of the contract would suggest, is the purchaser only in a position to terminate?

 

[Rob Legat - SBPL]

If the clause says purchaser, then just the purchaser. But I would anticipate there will be another clause which will allow the vendor to get out. It's a common thing for off the plan contracts where pesky things like council approvals can ruin everything.

 

[Rod]

Buying off the plan holds one, maybe two advantages for the purchaser, but is much better for the developer.

I agree with Rob. Developers, especially some in Victoria, use escape clauses to terminate contracts when the value of the property exceeds the sale price.

 

[Constance A]

Buying off the plan holds one, maybe two advantages for the purchaser, but is much better for the developer.

I agree with Rob. Developers, especially some in Victoria, use escape clauses to terminate contracts when the value of the property exceeds the sale price.

 

[Constance A]

Thanks for the replies. The only escape clause we can see in the contract, is 4.3 as mentioned above, allowing the purchaser to rescind should the title not be issued by sunset date. You have guessed correctly in that the vendor has ended the contract claiming legitimate delays, but not taking advantage of clause 4.4 which allows them to extend by 6 months to make up for those delays. The next day they had our townhouse up for sale again for $200K more than we paid for it.
Our conveyancer says thy are in breach of the contract by terminating it, but they are banking on the fact that most purchasers are too scared to take court action.

 

[Rod]

For a $200k difference, it might be time to pay a lawyer.

 

[Constance A]

We have a lawyer working on this, but for some reason he is hesitant to push the 'only the purchaser can end the contract' clause.

The conveyancer we were using prior to the vendor ending the contract tells us there is nothing in the contract that allows the vendor to end it and that the vendor is in breach of the contract by doing so. We cannot get a straight answer from our lawyer as to why he won't take this approach.

Our lawyer wants to pursue the vendor to use the 6 months allowed them in the contract to make up for the delays, which they chose not to use, while claiming legitimate delays. Our lawyer tells us that even if we 'win' there is no guarantee that the vendor will finish in the 6 months allowed and that further legal would be needed to prove they didn't use 'all reasonable endeavours' to finish it.

As this is a staged development it would seem quite easy, we imagine, for the developers to simply alter the staging to make our completion date go past the 6 month extension. We've actually just been told by the real estate agent that our particular townhouse will now be expected to finish within 12 months (as opposed to December this year, as we were told when we visited the site). It seems that even if we 'won' and they were instructed to use the 6 month extension.... they would still say it wasn't ready, that they'd changed the staging for any number of seemingly plausible, but made up, reasons and the onus would be on us to prove otherwise.

Wouldn't pursuit of clause 4.3 and the lack of specificity about the vendors right to end the contract possibly deal with it once and for all?


Is there any reason why a lawyer would take this approach rather than pursuing them for breach of contract?

Thanks in advance.

 

[Rod]

It is hard to second guess a lawyer who has read all the correspondence and the contract.

I'd be very surprised if the developer didn't have a legitimate escape clause (or 3, or 4). They create contracts to give them the best chance of making money.

You may be able to prove the delays were not legitimate but it is likely to involve a lot of time and expense doing the forensic digging through their paperwork to find what you need.

You could try a negotiated settlement whereby you get 25% of the increase in price ($50K) as a 'go away' payment. The developer has to weigh up how stubborn you are versus the $200K they stand to make if you walk away now.

 

[Constance A]

It is hard to second guess a lawyer who has read all the correspondence and the contract.

I'd be very surprised if the developer didn't have a legitimate escape clause (or 3, or 4). They create contracts to give them the best chance of making money.

You may be able to prove the delays were not legitimate but it is likely to involve a lot of time and expense doing the forensic digging through their paperwork to find what you need.

You could try a negotiated settlement whereby you get 25% of the increase in price ($50K) as a 'go away' payment. The developer has to weigh up how stubborn you are versus the $200K they stand to make if you walk away now.

The lawyer has said he agrees with the conveyancer that they are in breach of the contract.

Having bought off the plan a couple of times in Sydney, I have to say that this 'off the plan' contract is one of the most basic I have seen. I really do not believe there is anything in the contract that gives them an out. We thought about taking a settlement (and to be honest, I don't believe they would agree to it), but $50K will do nothing to help us buy something else. In the 18+ months we have been waiting for this, we have been completely priced out of the market.

I actually can't believe they let us fly interstate to pick out fixtures & fittings, walk through the completed homes - all the while knowing that 2 weeks later they were going to clawback the property.

 

[Rod]

The lawyer has said he agrees with the conveyancer that they are in breach of the contract.

The lawyer might be trying to keep the contract alive for you, and if that fails go them for breach of contract.

they let us fly interstate

Add the cost to a damages claim if the breach is prosecuted.