The recent Supreme Court of Victoria decision of Clifford v Solid Investments Australia Pty Ltd [2009] VSC 223 (Cliffords Case) confirms that special conditions in "off the plan" contracts of sale need to be carefully reviewed to ensure compliance with the Sale of Land Act 1962 (Vic) (Act).
A sunset date condition is one which stipulates the date by which the registration of the plan of subdivision must occur as a trigger to calling for settlement. Failure to register by that date confers on a purchaser a right to rescind the contract. It is not unusual for a contract to provide for the vendor to extend the sunset date if registration of the plan is, or is likely to be, delayed as a result of certain events occurring, usually delay events.
Cliffords Case held that clauses which provide for indefinite extensions of sunset dates are unenforceable and will give a purchaser a right to rescind the contract if the plan of subdivision has not been registered by the registration date specified in the contract. Such clauses go against the intention of the Act which is to give purchasers certainty about the date upon which they are entitled to exercise a right to rescind if the plan of subdivision had not been registered.
Both lenders and developers should ensure presales contracts do not provide for indefinite extensions to sunset dates to ensure their contracts do not breach the principles of Cliffords case and therefore may become voidable. Existing contracts should not be relied upon as allowing an extension of the registration date and ideally should be amended. That will require the purchaser's consent. New contracts should have a sufficiently long enough period to register the plan so the parties need not rely on extension rights.
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