A bill to amend legislation around off-the-plan property contracts will be presented to ACT parliament in November, to mitigate the risk of developers profiteering in a rising real estate market.
It comes as more Canberra home buyers step forward with reports of their off-the-plan townhouse contracts being cancelled by developer 3 Property Group, only to see the same properties resold for up to $200,000 more.
A rescission clause, or sunset clause, is a common 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. In the ACT, there are currently no laws to limit a developer's right to rescind off-the-plan contracts, leaving buyers at risk.
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Similar to NSW laws that were amended in 2015, the bill would see changes to ACT legislation that would require consent from the buyer or a Supreme Court order for a developer to rescind a contract.
"The court will be asked, in my bill, to consider a range of factors as to whether it's just and reasonable to rescind the contract, which includes taking advantage of a rise in the market or are there other factors that have affected the seller?" Mr Cain said.
Mr Cain said while he believes the issue is still the minority among ACT developments, it is impacting many Canberrans.
"Buying a house is one of the biggest decisions you make financially in your life ... being asked to pay an extra $200,000, that's going to kick some people out of the home buyer's market," he said.
"It's unconscionable conduct, in my opinion."
More buyers have emerged with stories of their contracts being terminated by 3 Property Group. Many say the developer pointed to delays and failure to get approvals as the reason for the cancellation.
Mohammad Choudhury said he saved for more than 10 years to secure a home for his family. His townhouse contract in the Form development in Coombs was rescinded in September.
"I don't have enough to get into the market now, maybe five years, 10 years later," he said.
Reece Peart signed a contract with the developer for a townhouse in the Allegro development, located in Throsby. Prior to receiving a rescission notice, he saw his future home listed for sale online for $200,000 more.
"They offered us to pay $180,000 or transfer to another property with greatly reduced square meterage ... it's just ridiculous," he said.
Mr Peart said he is now ineligible for the government grants that were available at the time.
"We can no longer get into the market the way it is. It's just impossible," he said.
Mr Peart is among a number of buyers who have come together to pursue a class action lawsuit, led by Adero Law.
Rahul Bedi, senior associate at Adero Law, said the firm is considering a range of potential remedies for clients, such as seeking damages.
Mr Bedi said he understands more than 90 Canberrans have had their contracts cancelled by 3 Property Group.
"It's been very emotional for them and caused extreme distress in some cases, in circumstances where they've been in lockdown and already psychologically vulnerable," he said.
Mr Peart hopes to at least be paid damages and to see law reform to better protect future buyers.
"And I personally hope that the ACCC gets involved in this and stops them permanently from building properties and suspends their licenses."
3 Property Group were contacted for this story but had not responded at time of publication.
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