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Victoria is aiming to clamp down on “dodgy” property developers through a new bill that would restrict the use of sunset clauses without the purchaser’s consent.
The legislation is meant to protect Victorians buying property off-the-plan from delay tactics used by some property developers to rip people off, the state government said in a statement.
A sunset clause refers to a contract provision that allows a developer to terminate a contract if the plan of subdivision has not been registered by a specified date. According to the government, developers can exploit the sunset clauses by deliberately delaying completing construction of their project, in order to terminate signed contracts of sale, and re-sell the property at a higher price.
Dubbed the “Sale of Land Amendment Bill 2018”, the bill stipulates that off-the-plan contracts cannot be terminated by a vendor under a sunset clause without the written consent of the purchaser or by order of the Supreme Court of Victoria.
The bill also introduces protections for people who purchase options to buy land as part of land banking schemes, including requiring money paid for options to be held in a trust. It also prohibits certain terms contracts and rent-to-buy arrangements, with significant fines and potential jail time for vendors and third-party intermediaries to act as a strong deterrent.
“We’re giving Victorians who buy off-the-plan more control and peace of mind by cracking down on dodgy developers,” said Victoria Minister for Consumer Affairs Marlene Kairouz in a statement. “This is about restoring balance and improving consumer protections so that Victorians can enter the property market with confidence.”
