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New sales clause robs buyers of their rights

Updated: Oct 10, 2022

The WAAA has been alerted to a number of prominent developers that have enclosed a new clause in their sales contracts that robs buyers of their voting powers.

The clause states that at signing of the contract, the buyer delegates the authority to the seller who then acts as their proxy for the first 12 months.

This means the buyer can not vote on such matters as defects or suppliers to their home, with the developer making these choices instead.

Ms Reece Director AAA stated the amended Strata Act introduced in May 2020 stopped developers, who still owned properties in the apartment building, from voting on defects for 10 years.

“The first 12 months after practical completion is important to owners and the Council as that is when you can lodge building defects with the builder and the cost of repairs are borne by them,” Ms Reece said.

“After that time frame you then have to take the matter to SAT if the builder is not amenable to undertaking the repairs and you only have six years of protection under the Statutory Warranty period.

“Effectively this clause favours the developer and the builder over that of the buyer and that, in our view, is a conflict of interest and unethical.”

Ms Reece suggested that current buyers review their sales contract and seek amendments prior to the property settling.

“You will need legal advice on how to rectify the situation but we have also brought this to the Government and DMIRS attention and seeking assistance in this area as well.”

An example of the clause is below:

In closing Ms Reece said that buyers needed to be aware of special conditions contained in contracts relating to voting and also price rises.

“We know that a significant portion of people who move into an apartment do so from a house and hence their understanding of this lifestyle is somewhat limited.

“And for that reason, please seek assistance prior to signing legal sales contracts to ensure that you ae agreeable to the additional conditions that are designed to reduce your rights.”

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