Could a vendor terminate a contract to sell off-the-plan property after the sunset date? Which case won?
Property buyer and property sellers enter into contract for sale of residential land
The parties entered into a conveyancing transaction for off-the-plan (unregistered) residential land in Picton, NSW.
The vendors were husband and wife. The wife signed the contract of sale on behalf of her husband. The purchaser signed the counterpart contract and the contracts were exchanged on 2 July 2015.
The contract contained several special conditions, one of which provided that the plan of subdivision must be registered within six months from the date of the contract (commonly referred to as a “sunset date”). If the vendor did everything reasonably necessary to register the plan of subdivision but failed to do so within this time, it would enable either party to rescind – that is, terminate the contract.
Vendors send Notices of Rescission to buyer after sunset date
On 25 August 2016 and again on 20 October 2016, over 12 months from the date of exchange, the sellers sent a Notice of Rescission to the legal representative of the purchaser.
The Notices of Rescission highlighted that since the plan of subdivision was not registered within the relevant time frame, namely six months, the vendors were exercising their right to terminate the contract.
Property buyer does not consent to termination of contract and lodges caveat over property
The purchaser did not consent to the termination of the contract and made reference to the statutory requirements of section 66ZL(4) of the NSW Conveyancing Act 1919, which requires at least twenty-eight days’ notice in writing specifying the reason for delay in registering the plan of subdivision and why the vendor is proposing to terminate the contract.
Consequently, the purchaser lodged a caveat over the property and brought an action of specific performance to the Supreme Court of NSW, in order to force the vendors to complete the sale of the land to him.
The plan of subdivision was subsequently registered on 23 December 2016.