Doma has confirmed there has been no attempt to cancel buyers' contracts in The Foothills development, which has come to a halt after being deemed unsuitable for financing.
But one legal professional has urged buyers to seek legal advice on their contracts.
On Monday, Doma contacted buyers of the 252-dwelling Campbell development to notify them of delays impacting the project's progress.
In a statement to The Canberra Times, Doma managing director Jure Domazet said due to cost escalations and delays "finance is unable to be secured for the development as it currently stands".
He said there was a "strong possibility" construction activity on the site would halt at least until the end of 2023, which would push the completion date to late-2025.
"These expected delays will also render the current sunset clauses within the existing sale contracts unacceptable to the project financier and will need to be extended," he said.
A sunset clause is a term in off-the-plan contracts that allows buyers or developers to exit a contract if certain milestones are not met by a specified date.
Questioned further on the matter, Mr Domazet clarified there had been no attempt to cancel buyers' contracts for The Foothills.
"Doma provide regular project updates for our developments to buyers," he told The Canberra Times in a statement.
"This advice to Foothills buyers was to make them aware of the timing changes so that they are informed and, if required, can discuss their individual circumstances with their real estate agent."
The developer also clarified finance had not yet been formally sought for the project, rather Doma had deemed it unsuitable for finance.
"We are very familiar with the metrics with which our financiers will offer funding and at present the development does not achieve those metrics," Mr Domazet said.
"We are working to see how these metrics can be met and have advised buyers that we will provide them with an update in the first quarter of 2023."
Mr Domazet said no other Doma projects are impacted by the delays.
The group is currently developing several sites in Canberra, include The Melrose in Woden and The Parks Red Hill, as well as a major residential project in Newcastle.
Buyers told to seek legal advice
Sales began in April 2020 for the development. As of Monday, contracts had exchanged on 193 dwellings across the first three precincts.
Precincts four and five are unaffected by the delays, the developer said.
Andrew Chakrabarty, senior associate at Canberra law firm Adero, said it was important purchasers impacted by the delays sought legal advice as soon as possible.
"Interpretation of sunset clauses are generally crucial in such issues," he said.
"The buyers should make informed choices as to whether the delay and uncertainty is worth the purchase, whether they are able to make informed decisions on the basis of reasons currently advanced by the Doma Group or whether the contract for sale is itself legally sound."
Mr Chakrabarty said it was concerning the project was unsuitable for finance.
"Even at its best, it demonstrates a lack of appropriate risk assessments being undertaken before soliciting purchasers," he said.
Project delays explained
Mr Domazet said there were significant delays in securing environmental, planning and heritage approvals from the Commonwealth. Despite these, the masterplan and development control plans got the green light in October 2019.
"In June 2020, despite the earlier approvals, the Commonwealth required an addendum to our original heritage studies and these were signed off by the Commonwealth on 4 December 2020 with no change to the original decision," he said,
Mr Domazet said an intervention by the ACT Heritage Council in December 2020 regarding the cultural significance of the site paused development for eight months.
Further delays occurred due to "unexpected remnant asbestos pipes", as well as wet weather, skills shortages and supply chain issues.
"The resultant rapid material and contractor cost escalation, interest rate increases, ACT building approval cost increases and supply authority costs have all contributed to a diminution in the financial metrics of the development," Mr Domazet said.
More protections for off-the-plan buyers
Following a string off-the-plan contract cancellations by developers in the ACT, laws were amended in late 2021 to offer more protections for buyers.
In the instance a developer does seek to cancel a contract, they must receive the buyer's consent. If a buyer does not agree, the developer can apply to the Supreme Court to have the contract rescinded.
ACT Attorney-General Shane Rattenbury would not comment on individual circumstances but encouraged buyers to seek legal advice.
"Buying your first home is a huge step, and it can be very distressing when things go unexpectedly wrong," he said.
"Buying off the plan is becoming an increasingly common pathway to home ownership, so it is important that buyers have protections so they can enter into these arrangements with confidence.
"I would encourage any buyer who is unsure about their rights to talk to their legal representative."
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