Land developer went bust - where do I stand?

My brother bought a block in 2016 on the Vic coast. Paid $280k.However, the developer went into liquidation (or whatever you call it) and KordaMentha took over last year as administrators. There's 40+ blocks involved.

The other week, we saw a sign go up advertising the land for sale. NONE of the original purchasers including my brother were notified. Each block is now worth about $650k.

We are seeking legal advice but everyone is slow getting back to us, leaving us in a state of limbo.

Looking at the Victorian Land Act, it looks like we are supposed to be notified in writing and given the option NOT to consent to ripping up the contract. But the land developer (who is on the contract) no longer exists. It's a mess! Doesn't the responsibility of the land developer flow to another body, perhaps the administrator? None of the parties involved have shown respect or consideration to the purchasers who's dreams have been shattered. Not even notification that the land is up for sale.

 

I think this is the legislation you are referring to:

SALE OF LAND ACT 1962 - SECT 10B Power of vendor to rescind a residential off-the-plan contract under sunset clause

(3) Before rescinding a residential off-the-plan contract under a sunset clause, the vendor must obtain the written consent of each purchaser to the rescission after giving each purchaser, at least 28 days before the proposed rescission, written notice setting out—

(a) the reason why the vendor is proposing to rescind the contract; and

(b) the reason for the delay in the registration of the plan of subdivision or the issuing of the occupancy permit; and

(c) that the purchaser is not obliged to consent to the proposed rescission.


Not a lawyer so dont know if the above applies to you when developer has gone into administration, but could be a starting point for you.

 

Does your brother still own the block or did he get his money back?

 

Yes, this is the exact section I've been reading over and over.

We have not been notified in writing in a formal sense, and it definitely doesn't include the 3a-c as written in the Act.

Our local government rep says to ask Consumer Affairs Victoria what happens in this case when the developer goes bust. The next section of the Act states that the Supreme Court can declare compensation for the purchasers.

 

All we got was a crappy email from KordaMentha (administrator) saying "you're welcome to get your deposits back now". AND we only got that email because I rang them asking WTF the For Sale sign was. Certainly not an official legal document imo. No, we haven't requested the deposit yet. Awaiting legal advice.

It's a disaster. This developer was banned from practicing in WA, yet was able to continue in Vic. The system is stacked against the little people.

 

Trying to understand. Bought it 2016 with a deposit and bank loan. When did they go belly up (what year) and have you been paying the bank loan since this?

 

• Bought in 2016.
• Paid the deposit 5-10% in cash (which is held in trust).
• The developer was in a court battle since then with the original land owner. That finished and he now owes her $7M in outstanding payments.
• We still haven't been formally notified that it's all over, unless you count KordaMentha's "I guess I'll send you an email now that you've seen the For Sale sign and called about it" email.
• No bank loan was sought as we'd only pursue when the land was to title. It never did.
• The entire land parcel is now up for sale and developers are looking to buy it. The agent selling the land claims to have no knowledge that contracts already exist.

 

I'm sorry to hear about your situation.

You need to speak to a lawyer asap. It may be that the above legislation is not the most important consideration. Even if the legislation applies, what are the consequences of non-compliance?

You may need to figure out whether you have any interest in the land or whether you only have a contractual right against the developer. If only contractual, then any claim you have against the developer (other than the deposit) may be dealt with equally with every other creditor. That is, your chances of recovery may be low. If you have an interest in the land, then your claim may take preference above ordinary creditors, though may still be defeated by those with a superior or earlier claim, such as the financier and perhaps the previous owner.

Not advice. You should seek legal advice.

 

Sounds wrong. What did YOUR solicitor advise. You may have a creditor or contractual right. If not correctly claimed it may be lost. You might have rights to seek a caveat to limit loss and encourage negotiation. A liquidator or administrator may be obliged to consider your claim

 

Is the developer in voluntary administration or liquidation? If it is the former there is a slim chance that the developer could be restructured and somebody putting in money to complete the project; though the fact that the insolvency practitioner is selling the properties may suggest a liquidation scenario.

In any event, what you should do is to request for a copy of the report to creditors, which you have a statutory entitlement to it. Then, you should lodge a proof of debt urgently so that your brother’s claim is preserved and not deemed to be surrendered or waived. You should get an insolvency lawyer involved, not a generalist as this is a highly specialised area of law.

 

You should have a solicitor give advice and send the liquidator a claim. It will likely need to include the contract and proof of the deposit being paid. The Partner of KordaMentha may be personally liable for your loss if they are negligent. If you have a contract it may be binding on the liquidator and they may need to withdraw the sale or consider you a creditor.