Caveat on off the plan property

[Jomel]

Hi all,

First time poster long time reader. Appreciate any input on my current situation below;

My contract for off the plan purchase was rescinded last year by the developer because the market has gone up substantially. They are now putting this unit back on the market and trying to sell it. I believe that to rescind the contract, if challenged, the developer must prove that they used all endeavour to finish and register the strata plan by the end of the sunset period. In this case, I believe they didn't. But to go to court and get them to settle with me cost a lot of money, and if I lose, I will be worse off.

Do you think I can put a caveat on the building? Is this the most cost effective way?

Many thanks for those who care to comment

 

[Terryw]

Off the plan contracts often have clauses prohibiting the lodgement of caveats - though you still could possibly lodge one as you have (or had) a caveatable interest.

But if the contract has been rescinded then your interest may lapse.

You had better speak to a lawyer.

 

[Jomel]

Thanks Terry, you are right in saying the prohibition of the caveat. It is prohibited for the buyer, myself, to lodge the caveat, but I believe my partner can lodge it as a party that lends the money to me. Am I right in saying this? Also, is there anything I need to be wary about before placing a caveat?

Have spoken to a lawyer, but due to the cost, I need to get other buyers who are in the same position to possibly ask for injunction. This will take a while and I don't want not to do anything in the meantime, thus the caveat

 

[Terryw]

You should not lodge a caveat by yourself as if you do lodge one and do not have an adequate interest then you could find yourself in the Supreme Court and could be up for the costs of the other party.

 

[Marty McDonald]

That's is shocking

 

[Ms Jade]

I believe that to rescind the contract, if challenged, the developer must prove that they used all endeavour to finish and register the strata plan by the end of the sunset period.

Wowee! I had no idea about this loophole. So in a rising market a developer can just have a long 'sunset period' thereby tying up the buyers, then fail to get the titles registered so that they can rescind & on-sell? That's an OTP risk I was unaware of. I guess it's an opportunity for developers to get required pre-sales at low prices in order to obtain finance, in the knowledge that they won't necessarily have to sell at those prices. Is this standard industry practice?

 

[mary&mat]

Wow, I'm gobsmacked too!

Can they really do this?

Agree with Ms Jade, thought OTP was a crock anyway, now even moreso!

 

[Terryw]

When you enter into a contract for an off the plan property there is often a clause which allows either party to pull out if construction is not complete by a certain date.

It can work both ways - the purchaser can pull out if the construction is too slow (and the value has gone down) or the builder can pull out if they are too slow (and if the values have gone up).

The trouble is that some builders see the value rising and therefore go slow so that they can rescind the contract and then later sell it at a higher amount.

 

[tarek85]

Hi all,

First time poster long time reader. Appreciate any input on my current situation below;

My contract for off the plan purchase was rescinded last year by the developer because the market has gone up substantially. They are now putting this unit back on the market and trying to sell it. I believe that to rescind the contract, if challenged, the developer must prove that they used all endeavour to finish and register the strata plan by the end of the sunset period. In this case, I believe they didn't. But to go to court and get them to settle with me cost a lot of money, and if I lose, I will be worse off.

Do you think I can put a caveat on the building? Is this the most cost effective way?

Many thanks for those who care to comment

Don't litigate - these practices are a prevalent with many developers but to get into a fight with them would be a waste of time and effort, even if you are legally right.

A good lawyer will tell you that they could fight it, a better lawyer will tell you stay away and focus on something else with stronger contractual terms in favour of the buyer.

Who is going to audit a developer on whether they "took every endeavour" ?

I am in my early stages of property practice in a suburban firm with over 30 years of experience in property and business transactions.

Message me privately for a referral for any property transactions.

 

[Jomel]

Hi Terry,

Thank you for the reply. I will not be lodging the caveat, but my friend will be as he lent the money to me to put down as the deposit. Would this classify as an adequate interest?

Hi Tarek,

I'm not sure how to PM, sorry... ,but I have added you in my friend list. Is that the correct way

 

[Terryw]

Hi Terry,

Thank you for the reply. I will not be lodging the caveat, but my friend will be as he lent the money to me to put down as the deposit. Would this classify as an adequate interest?

I doubt it. Your friend is owed money by you so he could sue you, but he wouldn't have any interest in the property. He is a third party. Wouldn't the vendor have returned your deposit anyway?

If your friend does lodge a caveat then he would be up for the potentially substantial costs of the other side. This could be for their legal fees and also any damage they may suffer such as losing a sale because of the caveat.