OTP Developer Dirty Tricks - the 'sunset clause' game

Developer tricks to watch out for when buying off the plan...

A GROUP of 34 home buyers has launched one of the biggest class actions of its kind after their contracts to buy luxury apartments were torn up under a controversial sunset clause.

Experts have warned of the growing trend of unscrupulous developers intentionally triggering sunset clauses, which give either party the right to pull out if the construction isn?t completed by a given date. The clauses allow developers to cancel contracts and resell the properties at higher prices.
That leaves many first home buyers priced out of the market altogether and unable to buy back in with their original deposits.

The group of Sydney buyers, who entered into off-the-plan contracts between November 2009 and May 2010 to buy units in a luxury apartment complex in Sydney?s Wolli Creek, have launched legal action against the developer, Kaymet Corporation, after it rescinded their contracts in March 2013.
The units in the development have appreciated by between $150,000 and $200,000 each. Kaymet Corporation stands to gain about $5 million if it is successful in relisting the units at their current market price.
http://www.news.com.au/finance/real...clause-cash-grab/story-fndban6l-1227385761594
 
"Kaymet Corporation cited a number of factors as contributing to the delay of the 94-unit complex, including water problems, high winds holding up construction, and council interference.
A company spokesman told news.com.au if they allowed the 34 buyers to have the apartments at the original price, they stood to lose between $50,000 and $60,000 per unit. The other 60 units are currently being rented out by Kaymet Corporation.
?The job cost us nearly double what we planned for,? he said. ?It?s cost us another $2 million in [lost] rent over the last two years [that the units have been vacant]. The contracts very obviously stated that either party can rescind if we didn?t finish in 2? years.?
Asked whether he thought it was unfair for the buyers to have to pay more for apartments they bought in good faith, the spokesman said: ?They can have them, but they have to compensate us for the extra work on the job. It?s not our fault. We paid a lot of money and if it costs us more than what we sell for, where is the fairness? They have to compensate us or they can?t have them.?
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god this attitude really gets my blood boiling!!!

hope the developers lose
 
Developer's risk is what it is called. If they ballsed up the original guesstimate for what it would cost to build, hold etc then it is their problem (unless of course there is a sunset clause in their favour).
 
this type of thing was all the rage in Perth in 2007 and the courts were inundated with it. I spent 8 years in the court system trying to enforce specific performance on one contract. Knowing what I know now I would advise these people to just walk away and move on with their lives.

Then it goes full circle, the market crashes and buyers are fine tooth combing their contracts looking for outs. The best out is a slight variation in the strata plan - put that at the back of your mind for 12 months time!
 
(unless of course there is a sunset clause in their favour).
amongst some other outs... one to look for is the one that goes on about "the seller may terminate this contract where it unable or unwilling to comply with any condition imposed upon it by....." - all unfettered, in its opinion etc etc
 
My mate bought OTP townhouse in oran park 2 years ago and the builder from thatcher homes has been avoiding him for the past 6 months as it was meant to be completed by christmas last year but it hasnt even started construction.. We went to meet the builder at the land today and the grub didn't rock up. My mate is so stressed he'll get stung by the builder that he wants to rush to buy something else in Oran Park.
 
My mate is so stressed he'll get stung by the builder that he wants to rush to buy something else in Oran Park.
What does his lawyer say? Does his contract have one of these clauses? Does it contain a "best endeavours" clause, requiring the builder to take all reasonable steps to complete in a timely manner?
 
My mate bought OTP townhouse in oran park 2 years ago and the builder from thatcher homes has been avoiding him for the past 6 months as it was meant to be completed by christmas last year but it hasnt even started construction.. We went to meet the builder at the land today and the grub didn't rock up. My mate is so stressed he'll get stung by the builder that he wants to rush to buy something else in Oran Park.
Wow. Seems like this sort of dodgy behaviour is becoming standard practice.

There have been other incidences of this sort of behaviour for land releases in North Kellyville.

http://www.smh.com.au/nsw/sydney-re...rs-leave-buyers-in-lurch-20150509-ggujfd.html
 
What does his lawyer say? Does his contract have one of these clauses? Does it contain a "best endeavours" clause, requiring the builder to take all reasonable steps to complete in a timely manner?
Just has a sunset date which is end of this year I think.
 
Wow. Seems like this sort of dodgy behaviour is becoming standard practice.

There have been other incidences of this sort of behaviour for land releases in North Kellyville.

http://www.smh.com.au/nsw/sydney-re...rs-leave-buyers-in-lurch-20150509-ggujfd.html
This is not surprising. A while ago, my solicitor told me of a development in Hurstville as well where the developer either wilfully or unknowingly made unauthorised amendments to the DA plans despite it being knocked back before by the council. I suspect the developer knew there was no chance in hell of it being successful and wanted to use that tactic to have the existing contracts rescinded. Considering how much the prices of property in that area have shot up in the last 2 years, the developer is easily looking at $100K-200k+ more profit per unit now.
 
OK, I'll be the cold one: who the hell signs contracts worth hundreds of $K without getting legal advice first? :confused:
 
would legal advice really have changed their minds about entering into the agreement?
My lawyer would strongly discourage me from signing it, at least without pretty strong "best endeavours" clauses and other protections.

At the very least, he would have told me of the risks in a rising market, and if I signed, I'd be knowingly taking that risk and have no grounds to complain.

But people seem to get into these situations and act all surprised, like they had no idea what they were signing. I don't get that.
 
I have 2 clients in this situation - both are land releases in Kellyville. The land was supposed to be registered in September 2014 - I told them both that they were getting played and although they agreed its hard to make a move.
 
Legal advice would be to make sure it was a big developer wouldn't it?
A sunset clause is a sunset clause no matter what your legal advice is isn't it?
 
Legal advice would be to make sure it was a big developer wouldn't it?
A sunset clause is a sunset clause no matter what your legal advice is isn't it?
No, sunset clauses are not all equal. If it doesn't have a tight "best endeavours" clause - requiring the developer to take all practical steps to achieve registration, for example - then a lawyer would recommend that the clause be amended.

Either the developer would agree to tightening of such clauses, and the buyer would be better protected, or the developer would refuse, and the lawyer would explain to the prospective purchaser precisely what risks they're taking and why it would be a very bad idea.
 
I have 2 clients in this situation - both are land releases in Kellyville. The land was supposed to be registered in September 2014 - I told them both that they were getting played and although they agreed its hard to make a move.
I bought land recently and sunset date is December 2017 with completion expected beginning of next year. When did these guys buy the land and how long did they have until sunset date? I know someone small developers selling land registering in 18 months with sunset clause being not long after
 
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