Off-the-plan buyers in Canberra are set for greater protections from this week, with a new law making it harder for developers to cancel sales.
The new law has been prompted by dozens of complaints from people who bought off-the-plan properties from the 3 Property Group, only to have them rescinded earlier this year.
The developer has not broken any laws, but buyers said the cancelled sales shut them out of the housing market and made them lose access to valuable government support programs.
Attorney-General Shane Rattenbury said the new legislation would be a blend of Victorian and New South Wales laws and better protect home buyers.
"The ACT laws will be a little broader than the New South Wales and Victorian models in the sense that those two jurisdictions specifically target sunset clauses," Mr Rattenbury said.
"We will design this legislation to cover broader delay events."
Changes to better protect buyers
The changes will include an obligation to give a buyer 28 days notice in writing of a developer's intention to rescind a sale, which the buyer must then consent to.
In cases where there is no agreement, the ACT Supreme Court will have to decide whether the rescission of the deal is fair and equitable.
"The Supreme Court will be required to consider factors such as, for example, a developer has not been able to get development approval there has been significant increase in costs for materials or other delay provisions that are reasonable," Mr Rattenbury said.
"But they will also need to make sure the potential buyer is not being taken advantage of."
Developers will also be required to pay any legal costs.
Mr Rattenbury said the law would come into effect on Tuesday, to prevent any last-minute attempts to bypass it.
The new law will not be retrospective.
Class action looms for 3 Property Group
Dozens of 3 Property buyers have already discussed a class action, with some seeking damages and others wanting their properties back.
At least two of the buyers have taken matters into their own hands and sought help from the courts.
Aaron Simonds, who told the ABC in July he had bought a townhouse in the 3 Property Group's Vivace development for $470,000 in 2018, lodged a caveat and foreshadowed a challenge to the validity of his cancelled sale in the ACT Supreme Court in September.
After the cancellation, his property was advertised at $690,000.
The court has confirmed Mr Simonds has since settled with the 3 Property Group.
But court documents also revealed the details of his challenge, in which he cited breaches of contract and Australian consumer laws.
In the documents, Mr Simonds said the letter rescinding the deal was light on detail.
"The detail provided by the first defendant (3 Property Group) cannot substantiate the validity of the purported rescission," Mr Simonds said.
A second buyer from the same development has also recently settled with the developer.
But the complaint about the lack of detail was common to many of those caught up in the cancelled sales.
The 3 Property Group has previously said the cancelled contracts were the result of external events, not greater profits.
A 3 Property Group spokesman listed a dispute with the original builder, the Black Summer bushfires, and COVID-19 disruptions, as some of the reasons it took action on the contracts.
The ACT Opposition will also introduce its own bill targeting off-the-plan sales on Tuesday.
