Home buyers who had their contracts cancelled after close to three years of delays at a Kurralta Park townhouse development have taken up their fight in court, and are warning others of the rising risk of socalled ‘sunset clauses’.
Prameykant Kakkad and Arun Vashishta are also calling for changes to the state-based legislation that governs sunset clauses, which are commonly used in off-the-plan residential contracts to enable a developer or home buyer to pull out of the contract if a project is not completed by a prespecified deadline known as the sunset date. In their statement of claim filed in the District Court, Mr Kakkad and Mr Vashishta say they entered contracts to acquire two townhouses in the Anzac Highway development in September 2020, agreeing to a sunset date of December 29, 2022.
With construction yet to be completed by that date, the developers terminated the contracts a couple of weeks later on January 10.
However Mr Kakkad and Mr Vashishta have accused the developers of deliberately stalling construction in order to trigger the sunset clause, allowing them to resell each townhouse for a price much higher than the $399,000 they’d negotiated, following a boom in property prices.
In the proceedings brought against developers Ameronix Pty Ltd and Treana Holdings Pty Ltd, and real estate agent Prohomes Realty, Mr Kakkad and Mr Vashishta are seeking orders that they be given the right to acquire the townhouses, or alternatively damages for breach of contract, misleading and deceptive conduct and/or unconscionable conduct.
Mr Kakkad said he was “fighting for my justice”,.
“I was a lawyer in India and this sunset clause is not in favour of the consumer,” he said. “If they (developer) cancel the contract what can the consumer do? This was our first dream house – it is not fair and it must be in the consumer’s favour, not developer’s.”
“My family is emotionally attached to the house because we live in the same area, me and my wife both work nearby and I wanted to send my daughter to Adelaide High. I need this house – that is my priority.”
Mr Vashishta said his family had been left “in shock and depression” after being left without a new home after years of anticipation. “This sunset clause is simply to safeguard them (developer),” he said. “If Covid and other things mean there’s changes then they (developers) should mark up the cost and take a genuine cost from us .. ”
In its defence, the developers say the Kurralta Park project was not completed by the sunset date due to the unavailability of materials and labour, and they remain willing to refund each $19,950 deposit paid by the two purchasers.
Prohomes Realty, in its defence, denies there were any unfair terms in the contracts or that it engaged in unconscionable, misleading or deceptive conduct. It says the purchasers were made aware of the special conditions within the sunset clause, and their signing of the contracts proved they were aware of their rights, and the rights of the developers, to pull out of the contracts under those conditions.
Governments in NSW, ACT and Victoria have introduced legislation that prevents developers from exploiting sunset clauses by unreasonably terminating contracts partway through construction.
Mark Gustavsson of Mark Gustavsson & Associates, acting for the families, says the risk to consumers is higher during times of rising house prices. He is calling for similar changes to protect South Australian home buyers.
A state government spokeswoman said any changes were unlikely in the short-term.
(Source: Adapted from “Buyers warn of sunset clause after three-year delay” by Giuseppe Tauriello, published in The Advertiser on July 1, 2023)