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Thursday, 23 February 2017

Developer barred from terminating under Sunset Clause




The New South Wales law provides that a developer cannot terminate under a sunset clause in an off-the-plan contract unless the Court grants them permission to do so.

Property values have soared over the last few years. Developers who entered off-the-plan contracts to sell a property for, say,  $400,000.00 in 2014, which by 2016 is worth $550,000.00, may feel unhappy at having to sell the property for less than its’ current market value. Some unscrupulous developers began using the sunset clause in the contract to terminate it by intentionally delaying the completion of projects until the sunset date arrived. At that point they were terminating the off-the-plan contracts, quickly completing the projects and then selling the properties.

In response the New South Wales law now protects buyers from developers looking to take advantage of the sunset clause in off-the-plan contracts by forcing developers to get Court approval before terminating the contract.

That legislation was tested recently in a case involving a developer and a purchaser.

The Court will consider the developer’s reasons for the delay in creating the Lot, whether the reasons for the delay are reasonable, whether the developer has acted in bad faith, what effect the termination will have on the purchaser and whether it is fair and equitable that the developer be allowed to terminate.

In the recent case of Jobema Developments Pty Limited v Zhu & Ors the developer selectively extended the sunset dates on some contracts in the development and not others, and offered no explanation as to why some contracts were extended where others weren’t.  It will come as no surprise that the Court refused the developer’s application.


It will be interesting to see how this protection is extended or redacted as more cases under these laws are brought before the Courts.

Thursday, 26 January 2017

Underbelly: housing schemes- Vendor finance and rent-to-buy housing schemes called a ‘black market’


Underbelly: housing schemes

 

Vendor finance and rent-to-buy housing schemes called a ‘black market’
 
 

The seemingly unstoppable rise in housing prices over the last decade has caused many Australians to feel ‘locked out’ of the dream of owning their own home.

 

Perhaps in response to this, a string of new businesses (called ‘equity providers’) have opened shop and now offer purchasers the ability to take a loan to pay the deposit on their home. The purchaser then makes their usual mortgage repayments to a bank in addition to paying back the equity provider for the deposit, usually over a period of 5 to 10 years. Assuming the purchaser has met their instalment payments, each year the equity provider transfers a small portion of ownership to the purchaser.

 

While this might appear to be great news for young people entering the property market, a recent investigation has revealed that people who enter into these arrangements are sometimes left worse off or even financially ruined.

 

The way the equity provider often charges what they call ‘option fees’. These fees are paid in exchange for the right to purchase the property from the equity provider at an agreed value when the instalments for the deposit are paid. The option fees don’t go towards paying off the debt.

 

The reason these arrangements can be risky is because the value of the property, and therefore the price the purchaser pays the equity provider at the end of the agreement, is agreed at the beginning of the agreement and not updated at any time before the purchaser purchases the property from the equity provider. Just some of the issues this creates for the purchaser include;

 

·        Some equity providers have over-inflated the worth of the property and set very high final purchase prices;

·        The purchaser ends up paying exorbitant option fees as well as funding two mortgages, and is  far worse off than before the agreement; and

·        Even if the purchaser is able to meet the repayments, there is then an over-inflated price for the property to be paid at the end of the agreement.

 

Some consumer advocates have called for these schemes to be banned, or at the very least provide protection under the National Credit Code.

Sunday, 27 November 2016

Parental Communication Paramount


Parental Communication Paramount

Words by head of Family Law- Warren Tegg

Most separating parents want an ongoing and meaningful relationship with their children. They will, after all, be parents for life. But what is the key to parenting effectively, while living in separate houses?

Parents will often each have different ideas regarding parenting, but that does not mean that one or the other parent is wrong, they are just different. And the differences are to be celebrated – those differences provide the children with two separate, and not necessarily opposing, viewpoints.

In order for a shared parenting agreement to work, these two people have to find a way to work with their differences. Firstly, children are very intelligent, they know when a weakness or difference of opinion appears in the approach being taken by their parents. Anyone with children will know they will play these two parents against each other to gain an outcome they see as beneficial to themselves.

This play off isn’t overtly selfish. Very young children will, early in the break-up, state to both parents that they don’t want to go to the other. This has nothing to do with
choosing one parent over the other. This break-up is very unsettling for the child, so the child may seek the exact same loving and caring response from both their parents to make themselves feel safe.

It is important for parents to recognise this and be able to maintain a basic and civil level of communication, just to protect themselves from being exploited.

It is helpful for the children for them to focus, not on the differences, but basics that perhaps they substantially agree upon. This way they can support one another in parenting decisions – provided same are basic to the child’s welfare and do not create any risk to the children.

The Court considers the parent’s ability to talk to one another about their children to be of paramount importance when looking at a co-parenting regime. It is deemed by the law to be in the children’s best interests that parents share the responsibility for the children’s care, but this becomes impossible if the two parents cannot cooperate together on some level.
Being able to speak to one another civilly and make decisions about your children, even when you do not entirely agree with the other party, is of fundamental importance if it is your goal to be a share parent.

Celebrate your different views, they introduce the children to diversity of thought! Agreeing on a set of basics you can live with, will lead to happier and more effective parenting.

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