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it was commonplace for ‘off the plan’ contracts of sale to include clauses
granting the vendor a reasonable extension of time to register the subdivision
plan upon giving notice to the purchaser. However, the recent decision of
Clifford & Anor v Solid Investments Australia Pty Ltd (2009) VSC 223 seems
to suggest that such extensions are invalid.
In this case,
the Court held that such extensions contravened section 9AE of the Sale of Land
Act 1962 (Vic) (‘the Act’) and were therefore of no effect. The Court
emphasized that a definite period of time must be fixed so that a purchaser
knows the date after which the contract of sale can be rescinded. The time,
once specified, cannot be subsequently extended by the vendor.
Consequently,
the purchasers in this case were entitled to rescind the contract of sale and
to recover the deposit.
The Court also
held that the right to rescind the contract of sale under section 9AE of the
Act was unqualified and arguments of election, waiver and estoppel could not be
used to defeat the purchaser’s right to rescind the contract of sale.
The decision has
been appealed, however, whilst the decision of the Court of Appeal is awaited,
it would be prudent for vendors and developers to avoid reliance on extensions.
At Rosendorff
Lawyers, we can assist you to ensure that all of your contracts of sale and
procedures comply in form and substance with the requirements of sections
9AA-9AE of the Act. Should you have any queries, please do not hesitate to
contact us.
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