Developer demands more money under sunset clause
“They’re trying to go for a quick cash grab,” Mr Parker said.
He had already paid about $6000 as a deposit to developer Custodian Toolern Syndicate in 2016 and almost $10,000 in costs to a separate builder.
New laws have been introduced to the Victorian Parliament to crack down on the use of sunset clauses, which have allowed developers to use delay tactics to exploit buyers. Those laws are yet to pass the Parliament’s upper house.
Mr Parker has bought land in other property developments before although he no longer owns them. Yet he had never heard of sunset clauses before he received the letter from Custodian Toolern Syndicate.
“The longest I’ve ever waited for a block of land was a year,” he said. “I just can’t see why they’d do that to people. We’ve been waiting three years. I’ve been renting. My life’s on hold.”
I just can’t see why they’d do that to people. We’ve been waiting three years. I’ve been renting. My life’s on hold.
Mr Parker said he knew of several other purchasers in a similar position, but he was not sure how many had received similar letters.
The new laws will be backdated to August last year. But sunset clauses will still be allowed with written consent from the buyer, or an order of the Supreme Court.
Fears remain that land developers will still have the upper hand over purchasers if they try to pursue sunset clauses through the courts.
The manager of the development, CFMG Land, defended the use of sunset clauses because The Millstone had encountered “extremely costly, unforeseen and unavoidable delays in construction”.
“This is not uncommon in recent years in the Melbourne market due to the high demand for property,” a company spokesman said. “On behalf of the investors, CFMG Land as the manager has a fiduciary duty to seek to mitigate against those costs to the best of our ability.”
He said the company had acted in good faith, offering to purchasers to “meet in the middle”.
“That is, we are offering purchasers to re-enter contracts on their lots halfway between their current value, and the original contract value.”
Consumer Affairs Minister Marlene Kairouz said the government was taking action to protect house and land buyers.
“We would expect this bill to pass the upper house as soon as possible, to improve consumer protections and restore balance so that families can enter the property market with confidence,” she said.
One conveyancer with knowledge of the estate said it was unfair for land developers to wield such power over buyers.
The conveyancer said Mr Parker would likely get back his deposit if the sunset clause was enacted, but he had already paid a building deposit and some conveyancing fees.
She said developers should never have been allowed to enact sunset clauses.
“That was their choice to sell at that price back then. The vendor should not be able to get out of it.”
Melton MP Steve McGhie urged the developer to “do the right thing” and honour the original contract.
“I personally find it disturbing that a developer is trying to take advantage of young families and first home owners in my electorate trying to build a home,” he said.
The real estate agent who sold the land, Red23, declined to comment.
Benjamin is a state political reporter