Off the plan dilema

Hi

Hoping to get some guidance here as I'm not sure what to do. I purchased an off the plan townhouse 16 months ago (in NSW). The block had been cleared, the agent told me they were due to start asap and only 3 out of 9 remained unsold

I went ahead with the purchase, the only thing that stood out to my lawyer was a 3 yr sunset clause but we went ahead

16 months later and absolutely nothing has happened onsite. Been given the run-around the whole time, agent is useless and ignores calls, replies to emails eventually but thats about it. Developer didn't want to speak to me, just referred me to the agent.

My solicitor called developers solicitor and got a 5 second phone call, just that they are still waiting on finance (if they are pre-sold how does that work?). Strata plans were submitted last year

Last week we went past the site and noticed the signage has been removed and the porta-loo has been taken away. I felt sick that we're going backwards. I called the developer again and they finally spoke to me, said the builder hasn't got funds together, they removed the sign to stop getting calls and the toilet as it was costing them money. They said they need 12 months build time

Can I do anything? I understand the sunset clause, but if they haven't even started yet is there a point in time where its obvious they have no way to meet the deadline? I've had to pay stamp duty in the mean time and its a lot of money tied up now and getting a bit stressful

deposit is in a trust account from the agent

thanks for any help!

 

You might be lucky if you can use the sunset clause. What will be the val be in another 12+ months?

 

Something to check with your lawyer?

You say you understood and noted the sunset clause, but I would have thought a typical one would mean they can do whatever they want within the 3 years and you just have to wait.

Is that not your understanding?

 

Is there a point though where they clearly don't have enough time to build i.e. if its 6 months out and they haven't started that I have any options to rescind?

Is the agent the most appropriate person to ask if they will look at rescinding ? Im worried that they haven't been able to get finance this far into the project, that if 80% were supposedly sold then why are there issues. Also, they are no longer trying to sell the remaining townhouses

 

You are locked into a contract. You could ask the vendor if they would agree to termination of the contract and let you out without penalty, or wait for the sunset clause.

 

Doesn't the sunset clause say they just have to start? Have a close read.

Sure ask their agent to check their position, but otherwise you will need your own legal advice if they don't play ball.

 

Why would they let you rescind?

 

It’s unlikely you can terminate until the sunset date has lapsed. Seek proper legal advice for a definitive answer.

 

To get finance approved it is likely the developer will need a certain % of the units presold. It is probably unlikely they will let you out of the contract until they give up on the project.

 

My brother in law and his wife just settled otp.. there were multiple defects which were reviewed the day before settlement. The developer was there taking photos and documenting this.

Their solicitor advised them over the phone ( not in writing) there’s nothing you can do about this, as the contract states a building report has been completed and the property is habitable .

Based on this advice they thought they had no leg to stand on.

I don’t agree with this. Why didn’t their solicitor fight for a later settlement given the amount of issues.

There are multiple defects in every room and even the entire building which have unfinished jobs.

Can you disagree to an otp settlement due to defects?

And how do they take it further in terms of the poor work and unfinished jobs in the complex? Would they have to engage their strata as they are worried strata will start taking out money for jobs the builder didn’t finish

 

What sort of defects?

 

Major defects which are structural or inconsistent to the contract (eg a missing bedroom but there is a study instead) needs immediate legal advice PRIOR to settlement.

For general issues on construction defects like marks, gyprock defects, paint issues then there will be a maintenance process for you to report these and the builder should fix it. Take care as its often a single report within XX days. My house had a 28 day clause but we did it after around 10 days so we could see what was defective - The supervisor and myself did a walk through and agreed on the report then they had a gang of tradies appear on a single day and fix the lot in a few hours. Its not an issue to delay settlement. Your contract likely contains the clause which explains the process. Sometimes these issue appear major but arent. eg a colleague purchased a unit and the kitchen tap didnt even run into the sink - Ran onto the bench. The AC unit didnt work due a tech screw into a pipe etc.

 

Thanks, they were general cosmetic defects.

 

Hi

So long story short, it looks like it’s fallen through. The agent has said he can’t tell me
Anything but he thinks they’ve gone into administration and to call my solicitor

ASIC has the company in my contract listed as deregistered . What’s the refund process like ? My money is in the agents trust account and I’ve paid stamp duty

My solicitor is in court so won’t be able to get back to me for a day , just worried now !

 

I don't really see what the fuss is about. Nothing urgent and doesn't seem worrying will change anything.

What does the contract say about insolvency? You could usually terminate and get your deposit back, and pay your legal fees.

BTW 'solicitor in court' is often a sign they don't want to talk to you.

 

thanks. I've never been in this situation and its been difficult because unless I've chased things up, I havent heard anything from anyone. For seasoned investors maybe its normal but its a huge amount of money to me

 

Stop giving away all our secrets!

 

I'd email the agent and ask for the money they have "in trust" back. Don't need a solicitor for that. See how they respond.

 

Deregistration is not correct. It should show as in liquidation or adminstration. If its shows as deregistered there may be a problem. A deregistration can occur due to unpaid ASIC fees but may also be caused by a false Form 6010 being lodged perhaps with dubious motives. You can order a search with ASIC data providers like Dun and Bradstreet and if its a Form 6010 you may want to contact ASIC and object to the deregistration since the company has assets and/or liabilities. Thats when the fun starts - A liquidation ?

You should hope the funds are in the trust account and can be released. They may be claimed by the liquidator or the agent may assert a right to income etc....Definitely needs legal advice.