NSW Government Discussion Papers: Off-the-Plan Contracts for Residential Property

Towards the end of 2017, the Minister for Finance, Service and Property, Victor Dominello, released two (2) Discussion papers for comment in relation to:

  • Removing barriers to electronic land contracts, and
  • Off-the-Plan Contracts for Residential Property.

Off-the-Plan Contracts for Residential Property

This paper seeks to gain feedback on proposed reforms to off-the-plan contracts for the sale of real property in NSW. There is a fine balance between protecting purchasers and the reality of various property development vulnerabilities faced by the developers.

The number of off-the-plan contracts has significantly increased in recent years. During the 2006/07 financial year, there were 2,148 off-the-plan contracts, contributing to 1.25% of all residential property sales, in the last financial year this increased to 29,022, about 11.5% of all residential property sales.

Minister Dominello said:

“Purchasing a property is one of the most significant financial decisions a person or couple will make in their lifetime. It is vital that home buyers have all the relevant information they need to make an informed decision.”

“NSW is booming and buying off-the-plan is becoming increasingly popular. But there are risks involved and buyers must look beyond glossy brochures and fancy display centres. The proposals are designed to both strengthen protections for home buyers and provide clarity for developers.”

This Paper canvases a range of measures that will help standardise practices within the industry and provide a better outcome for all sides.


One proposal is that a mandatory prescribed Disclosure Statement be provided to purchasers with a simplified, easy-to-read document that summarises key aspects of the sale.

This proposal indicates that the documents required to be attached to the Disclosure Statement should be limited and should not duplicate those required to be attached to the contract for sale as part of the Vendor Disclosure regime.

The NSW Government suggests these documents should include:

  • Proposed plan
  • Proposed By-laws
  • Proposed schedule of Unit Entitlements
  • Estimate of proposed Levy Contributions

In relation to the Unit Entitlements and Levy Contributions, these are likely to be guestimates as they are calculated upon the anticipated valuation of the property at completion.

At common law, a difference between what is described in the contract and what is to be transferred may constitute a breach of contract, which could allow a purchaser to rescind or claim compensation. It is prudent to allow developers a certain amount of leeway for variations that are required to occur during the construction phase for practicality.

Another proposal is for the developer to provide a registered copy of the plan before notice to settle can be issued. This would be a helpful requirement, as any issues with the registered plan can be raised and resolved in a timelier manner.

Review of sunset provisions

The paper also seeks to review the newly introduced s66ZL of the Conveyancing Act 1919 in regards to sunset clauses. Now a developer needs to obtain an Order from the Supreme Court to trigger a sunset date clause and rescind contracts. The two issues raised are: firstly, the definition of “sunset clause” and other termination triggers; and, secondly the Court’s discretionary power to award damages.

We will be interested in seeing the outcomes of these discussion papers and will be contributing to submissions on both.

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