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New Contract Rescission Laws Passed by ACT Government

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This week, the ACT Legislative Assembly agreed to the Government’s Civil Law (Sale of Residential Property) Amendment Bill 2021.

ACT Attorney-General Shane Rattenbury said the new laws will protect homebuyers from sunset and development delay clauses in illegitimate and unjustifiable circumstances. However the MBA has warned the Government that the rush to implement these laws with inadequate stakeholder consultation will likely lead to unintended consequences and only put more pressure on an industry currently dealing with material and labour shortages, and just starting to recover after the nation’s longest construction industry COVID shutdown.

Under the legislation developers will only be able to use sunset and development delay clauses to rescind a contract if the buyer consents or if they’re permitted by an order of the ACT Supreme Court.

A developer wanting to rescind a contract must provide 28 days written notice to the buyer, setting out the reasoning behind the proposed rescission under the clause.

If the buyer does not agree, the developer may seek an order from the Supreme Court permitting the rescission. However, the developer must satisfy the Court that the order is just and equitable in the circumstances.

The Supreme Court must consider a range of factors, including the impact of rescission on both the buyer and seller. If a developer wants to pursue the matter in the Supreme Court, the developer will be liable to pay the costs of the buyer unless they are able to establish that the purchaser has unreasonably withheld their consent.

The new laws are taken to have been in effect since they were introduced into the Legislative Assembly on 9 November 2021.

The Bill is available on the ACT Legislation Register here Civil Law (Sale of Residential Property) Amendment Bill 2021 | Bills (act.gov.au).

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