More disclosure obligations for NSW developers

December 2018

Legislation has recently passed both houses of the NSW parliament heralding sweeping changes to the disclosure requirements for off-the-plan developers and giving subsequent termination rights for purchasers. Partner Marcus Cutchey and lawyer Luke Hefferan confirm the new regime means developers will need to attach additional documents to off-the-plan contracts and notify purchasers if a "material particular" in that information later becomes inaccurate. If a purchaser is materially prejudiced by the change to a material particular, they will have a statutory right to rescind the contract.


Although the legislation has been passed, the accompanying regulations have not been published. The new regime is likely to commence shortly after the publication of the accompanying regulations.


In addition to the standard attachments required under the existing legislation, developers will also need to include a copy of the draft plan (prepared by a surveyor) as well as "any other documents...prescribed by regulations".

Although the regulations have not been finalised it is safe to assume the items referred to in the definition of "material particular" will also need to be included. These consist of the draft by-laws, any easements/covenants affecting the lot being sold and the schedule of finishes.

The additional documents required to be attached are referred to as the "disclosure statement."


Developers will need to give a notice to all purchasers at least 21 days prior to completion if the developer becomes aware a "material particular" in the disclosure statement was inaccurate (Notice of Changes).

A "material particular" is defined as—

  • a change to the draft plan
  • a provision of draft by-laws
  • an easement or covenant
  • changes to the schedule of finishes, and
  • any other matter prescribed by the regulations,

that will, or is likely to, adversely affect the use or enjoyment of the subject lot, but does not include a matter excluded by the regulations.

The notice will be required to be given in the approved form.


Within 14 days of receiving a Notice of Changes from the developer, a purchaser may give a notice to rescind the contract (Rescission Notice) if—

  • they would not have entered into the contract had they been aware the change would occur, and
  • they are materially prejudiced by the change.

If the purchaser does not give a Rescission Notice within this 14 day period, they are deemed to have accepted the changes and lose the right to rescind the contract due to the inaccuracies outlined in the Notice of Changes.


Irrespective of whether there are any changes to the draft plan, the developer must give the purchaser a copy of the registered plan and any other documents registered with the plan at least 21 days prior to completion.

Similar to the purchaser's rights regarding a Notice of Changes, a purchaser—

  • may rescind the contract (within 14 days of receiving the registered plan) if they would not have entered the contract had they known about the change and they are materially prejudiced as a result, and
  • loses their right to rescind the contract if they do not give a notice of rescission within 14 days of receipt of the registered plan and other documents registered with the plan.


Until the accompanying regulations are finalised, it is difficult to confirm the overall impact this will have for developers of off-the-plan schemes.

However, it is clear the legislation will look subjectively at the purchaser's circumstances to determine whether that purchaser would have entered into a contract had they known the change would occur and whether they are materially prejudiced as a result.

Although appearing ominous for NSW developers, the equivalent legislation in Queensland has been in place for more than 20 years and we have not seen significant numbers of contract rescissions under that legislation (which only requires the purchaser to establish they are materially prejudiced by a change). It would seem logical for the NSW courts to be guided by Queensland case law as this new legislation is tested.


While the regulations are being finalised developers should review their current contracts to ensure these can be updated expediently to include the disclosure statement documents once the legislation commences.

We will provide further information about the disclosure obligations under this legislation when the regulations are published.