While purchasing off-the-plan can have many advantages, such as enabling you to access the market for a modern home at a lower purchase price, it is not without its risks.
One risk which lingers at the back of almost every purchaser’s mind is the possibility that the final product differs significantly to what they were initially promised.
The case of Victorsen v Easy Living Holdings Pty Ltd [2019] NSWSC 1721 provides guidance on what might happen in such a situation.
The Facts
The plaintiffs, the Victorsens, entered a contract of sale for an off-the-plan property with the defendant developer.
Prior to exchanging contracts, the plaintiffs made clear that they wished for their property to have a grassed front yard for their child to play on. A director of the defendant assured them this would be the case, a promise which was reflected in the landscape plans attached to the contract.
In fact, the property was not built with a grassed front yard. Instead, the onsite stormwater detention tank had been built under the front yard, contrary to the plans, and a timber deck had been built over the tank to cover it.
The plaintiffs refused to pay the balance of the purchase price and sought to rescind the contract on the basis that the property as built was materially and substantially different from that which the defendant promised to convey.
The defendant denied this claim, arguing that the evidence showed that the grassed area was not of great concern to the plaintiffs.
Judgement
Justice Darke accepted the plaintiff’s argument, applying the principle in the case of Flight v Booth.
Namely, he ruled that a purchaser will be entitled to rescind a contract where the property differs in a material and substantial manner from how it was described in the contract.
A discrepancy is material and substantial if the purchaser can prove on the evidence that, but for its existence, the purchaser would not have proceeded with the purchase.
On the evidence, Justice Darke was satisfied that had the plaintiffs known the front yard would turn out as it did, they would not have entered the contract.
Key Takeaways
Almost invariably, off-the-plan contracts will include clauses which state that a small level of discrepancy between the property as promised and the property as built will be acceptable.
However, the case of Victorsen v Easy Living Holdings Pty Ltd reaffirms that there are limits on what can be considered an acceptable discrepancy.
Disclaimer:
Please note that this article is intended for general information purposes only and should not be considered as legal advice. The information provided herein is based on general legal principles and may not apply to specific factual or legal circumstances. If you require legal advice or guidance tailored to your situation, we strongly encourage you to contact our firm directly and engage our services. Reliance on the contents of this article without seeking professional counsel is not recommended.