By Benjamin Preiss/The Age
Scott Parker believed he was making a safe investment when he paid a deposit on a block of land three years ago in Melbourne’s outer west.
But earlier this month Mr Parker was stunned to receive a letter from the land developer’s lawyers enacting a clause in the contract to renegotiate the property price of $185,000, up from the original sum of $130,000.
His contract for the land on The Millstone estate in Melton South contained a sunset clause allowing both parties to terminate the deal after three years, which has elapsed, if the plan for the subdivision had not been registered.
But the letter said he could keep the property by accepting the higher price.
“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.” 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.
