It's shattering': Owners take developer to court over plans to resell land
Four Keysborough landowners have had a small victory in a Supreme Court battle against their developer in a case set to again throw in to the spotlight the contentious issue of sunset clawback.
Green Village Property Development is accused of unnecessarily delaying the development of a land-only estate, which culminated in the termination of at least four contracts.
The value of the plots has risen substantially since they were first sold off-the-plan in 2015 for between $362,000 and $409,000. Several blocks in the development recently sold for about $630,000.
The landowners’ lawyer Michael Benjamin said the number of disputes between property sellers and buyers about sunset clauses was noticeably growing, but few made it to court because litigation was so expensive.
The case comes as the state government considers amending legislation to strengthen protections for buyers in off-the-plan sales.
The development in Bend Road was little more than an empty patch of grass when Green Village sold 31 lots of land off-the-plan.
Among the first purchasers were the four plaintiffs — three couples and a builder — who signed their contracts in February and March of 2015.
In order to complete the estate and have the separate land titles registered, the developer needed to comply with several requirements including arranging the water, sewerage, internet, power and road services.
But the project was extensively delayed, and the four plaintiffs in the estate were left in the lurch earlier this year when their contract was rescinded because the plan of subdivision had not been registered within 36 months.
The developer registered the plan of subdivision in early April, according to title documents.
Mr Benjamin will argue the developer did not use its best endeavours to complete the project on time.
“In normal practice, three years is an exorbitantly long time for a land-only development of 31 lots,” Mr Benjamin said.
Buyers John and Michelle Reece said when they handed over their deposit for the block of land in March of 2015, they were told settlement would be that September. In the years that followed, they were repeatedly told the development was almost finished, the couple said.
Mr Reece, 51, said he felt duped by the developer. “It’s just shattering,” he said. “We’ve put all our plans on hold. Financially, even if we got our block now we’d be worse off because the cost of building has gone up exponentially.”
The couple, who have two adult children that remain at home, said they felt compelled to take the case to court. “I just don’t see how developers can do this. It’s wrong.”
The sunset clause — a special condition in off-the-plan contracts of sale that allow either the buyer or vendor to terminate the contract if the project is not finished within the stated timeframe — has gained notoriety in Victoria.
If developers delay a project’s registration in order to trigger the sunset clause and relist property at a higher price — a practice dubbed sunset clawback — buyers have little recourse, with the exception of mounting a case in the Supreme Court.
The state government said sunset clauses were part of its wide-ranging review into consumer property laws. It is understood the government is considering adopting similar legislation to NSW, where vendors must either seek the purchaser’s permission or seek court approval in order to end a contract.
Associate Justice Mark Derham on Thursday ordered an interim injunction that temporarily prevented Green Village Property Development from reselling the four Keysborough blocks of land.
It is the first step in legal proceedings, that could see the case to trial.
Grant Walker, acting on behalf of the developer, told the court on Tuesday that he was seeking further instructions from his clients, who were all overseas.
The three directors of Green Village Property Development, Qing Chu, Yuexia Huang and Jixin Xu, are Chinese nationals, registered at addresses in Kew, Armadale and Templestowe.
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