The family of four watched tradies finish building their home and were excited to move in. But they were “angry” when the contract was terminated.
A Queensland family claims they were left to “suffer” after a developer building their dream home invoked a cancellation clause in the contract.
Benjamin* had signed a contract in February last year to purchase a townhouse in a new development project in the Brisbane suburb of Parkinson.
He was told the house would be ready for his family of four by June last year, but is furious that his family will never be able to live in their dream home.
Now the family doesn’t know if they can ever afford a new home after being priced out of the area when the developer, Highway Developments No. 1, activated the expiration clause to legally terminate the contract in January this year.
Benjamin said they originally bought the mansion for $466,900, but claimed homes in the development are now selling for hundreds of thousands more.
The 42-year-old had requested that the sunset date be shortened from five years to less than one, as they believed the site would be ready by June, as work on the site had already begun.
“Personally, I believe the house was 95 percent ready in August when they confirmed in writing that it was ready for bank valuation and the banker came to see it,” he claimed.
“Then…I don’t know what happened.”
Over the next five months, the completion date kept getting pushed back until Benjamin was told his new home would be ready in January 2022.
“There were fixtures in the bathroom, the air-conditioning had been installed and the electricity had been put in by July 2021,” he told news.com.au.
“They were an experienced developer building in the same area with many projects.”
Benjamin claims the contractor’s key equipment was removed from the job site just before Christmas.
Still, he began to worry when the expiration clause loomed on December 31, 2021 and a request to extend it was denied, despite completion being only a month away.
Then, five days before the new year, a letter bomb dropped into his inbox telling him that the contract had been terminated on the basis of the expiration clause.
“I tried to contact them, even to see if they were willing to negotiate, but they refused to talk to me,” he said.
“The developers said it’s a legal matter, so talk to our lawyer and I said, ‘Okay, if it’s not intentional and it’s something you have no control over and something like a natural disaster happened, give us at least details of what happened’.”
“We’re angry and frustrated because when we try to call the developers, they don’t want to talk, they don’t want to listen to you.”
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‘Challenging constraints’ in the construction industry
However, the developer Highway Developments No 1 has denied that the house was complete, saying the project was “subject to significant delays related to material supply and trade shortages, as well as lengthy regulatory processes,” according to a statement from their law firm David K Lawyers. provided to news.com.au.
It added that these factors are all “challenging constraints experienced by developers in the construction industry”.
“As a result, all expected timeframes provided by our client were purely estimates, as it would not have been possible to provide a definitive record date,” the statement said.
“Our client has tried to provide as accurate a timeline as possible, but the registration of this development did not finally take place until March 2022, months after this contract expired.”
The law firm added that the developer had “as far as possible contacted the buyer directly with regard to their questions”, but that it became appropriate to refer them to their legal representative “as the buyer had legal questions and contractual matters” .
The father of two, whose children are aged eight and 11, says that as a result of the developer canceling the contract using the expiration clause, they can take advantage of Brisbane’s skyrocketing property prices meaning they have a lot more money. can get for the mansion .
“Prices rose by 20 to 25 percent,” he added.
“You can imagine the difference if they sold the property for $650,000 or $700,000. By canceling my contract, they are making over $270,000 from my unit alone.”
Benjamin said he was already priced out of owning a house and that the mansion was a good compromise, but now he doesn’t know if the family will ever be able to afford their own.
“We thought: what are we going to do? The prices had gone up so much, we can’t buy the same thing in the same area for the same price and we don’t have extra budget. Initially it was very depressing and we thought we weren’t getting a HomeBuilder subsidy, had to pay stamp duties and because prices have gone up we wouldn’t be able to have a 20 percent down payment and pay the lender’s mortgage insurance,” he said. said.
“We got more and more depressed, there were nights when I honestly couldn’t even sleep thinking about what to do.
“We are the losers in all of this.”
‘Decides to accept this risk’
Attorneys for Highway Development No. 1 blamed the impact of Covid of creating a business shortage and lack of needed materials, including cladding and internal fasteners as the reasons for the delay, in a letter to Benjamin’s law firm.
They also blamed several authorities, including the “on-site energy supplier experiencing significant delays in required upgrades and connection to the grid”, and weather-related delays at critical points during construction.
In a statement to news.com.au, David K Lawyers added that “construction of the individual townhouses or the removal of heavy machinery from the site would not be accurate indicators of how close development was to registration”.
“The physical construction of the townhouses is only one step in this process, as city council and other legal requirements must be met before title registration is possible,” it said.
The possibility that real estate is not registered on the sunset date is an inherent risk associated with off-the-plan contracts, the developer’s attorneys said.
“In this case, the buyer specifically requested a shorter expiration date when the contract was being negotiated. The expiration clause also allowed the buyer to terminate the contract if registration had not occurred on the expiration date,” the statement said.
“When the contract was signed, our client was prepared to bear this risk. In this case, the result of the buyer’s decision was that the sunset date was significantly less than what turned out to be a delayed record date.
“It was the buyer’s decision to accept this risk. Likewise, our customer had ample right to refuse a change of contract afterwards.”
Issuance of the sunset clause in Queensland
The family is not alone in being subject to the sunset clause issue with two other Queenslanders families left angry and sad after the developer terminated the contract for their dream home.
One left a Queensland mommy “cries every day” after their contract was canceled due to their expiration clause.
In Queensland, forfeiture clauses are legal and have been used for other developments in Brisbane and the Gold Coast.
Other states in Australia have moved to provide greater protections for buyers buying from the plan.
In New South Wales and Victoria, special laws were enacted requiring sellers to obtain approval from the buyer or the Supreme Court before using the forfeiture clause to terminate an off-the-plan contract.
‘The damage has been done’
Benjamin has criticized the Queensland government for failing to intervene on the issue, as it puts buyers like him in an “unfair” position, he said, even though the practice is legal.
“In NSW or Victoria, they’ve already made the laws and changes so developers can’t cancel the contract unless they have written permission from buyers or a Supreme Court order that delays are beyond their control and that’s the logical thing to do, ” he said.
“It is too little, too late from the Queensland Government, the damage has already been done and so many people have already suffered.”
A spokesman for the Office of Fair Trading said the Queensland government is investigating the issue of the termination of contracts outside the plan through foreclosure clauses, as part of the Property Law Review, which is currently underway.
“This review will carefully consider approaches adopted by other jurisdictions that have struggled with issues related to sunset clauses being included in off-plan sales contracts,” they said.
“It is important that the Government of Queensland consults carefully with all relevant stakeholders to ensure that any legislative solution that is developed addresses the issue appropriately without causing unintended unintended consequences.
“Subject to this consultation and consideration, the Attorney General has indicated that she plans to make legislative changes to address the issue before the end of the year.”
*Name has been changed
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