Elevate Estate Ormeau: Developer’s reasons for terminating contracts

The developer behind a Gold Coast estate where the contracts of some buyers were controversially terminated has given its side of the story.

The developer of a Gold Coast residential estate says it was abiding by the law when it terminated client contracts, costing them thousands of dollars in deposits.

Some deals at Elevate Estate in Ormeau were terminated under a special condition that states either the buyer or seller can walk away after 18 months if settlement is not achieved.

Such clauses are often used in residential land sales in Queensland, and are commonly referred to as sunset clauses. Legislation does not prohibit their use.

In a statement to the Bulletin, Ormeau Developments Pty Ltd, which is owned by CFMG Capital, said it was “bound by any legislation regarding off-the-plan land sales and will abide by that legislation”.

“Unfortunately, that legislation includes a requirement in the Land Sales Act that Ormeau Developments Pty Ltd, as seller of a proposed allotment, must settle the contract for the sale of a proposed allotment not later than 18 months after a buyer enters into a contract for the sale of a proposed allotment.”

Daniel Lees and his two dogs at Elevate Estate in Ormeau Hills, where he had signed up to purchase land with his ex partner. Picture: Glenn Hampson.

Section 14 (1) of the Land Sale Act states: “The seller of a proposed lot must settle the contract for the sale of the lot not later than 18 months after the buyer enters into the contract for the sale of the lot.”

The Act further states that if this condition is not met “the buyer may terminate the contract for the sale of the proposed lot by written notice given to the seller before the contract is settled.”

Section 14 does not mention circumstances in which the contract is terminated by the seller.

Ormeau Developments said delays at the Elevate site were due to “unexpected challenges” it was working to resolve and “unprecedented weather delays”.

“To mitigate against ongoing delays Ormeau Developments Pty Ltd has made ongoing adjustments in the past 12 months,” the statement read.

“However, unfortunately delays with the Gold Coast City Council assessing those changes have led to continued delays and decisions of the Gold Coast City Council have resulted in further applications and assessment being required which are currently outstanding and resulting in further uncertainty on timing.”

The termination of the contracts left many buyers distraught, including one couple who said they had spilt up amid the stress of the situation.

Attorney General, Shannon Fentiman. Picture: Zak Simmonds

In the wake of the Bulletin’s reports, Attorney General Shannon Fentiman said developers should “do the right thing” by buyers and act “fairly and reasonably”.

The state government is considering changes to legislation to restrict the use of sunset clauses as part of a wide-ranging review of Queensland property law. Ms Fentiman expected a Bill to be introduced to parliament by the end of the year.

“Since the pandemic we have seen demand for housing in Queensland grow – this has resulted in Queenslanders buying off the plan, delays in ordering building products and in some cases, developers terminating contracts,” Ms Fentiman said.

“Sunset clauses are not part of the standard REIQ Queensland Law Society endorsed contract.

“Any Queenslander looking to buy a new residential property should obtain independent legal advice before signing a contract, especially when a contract includes added conditions.

“And for Queenslanders who are already in a contract and are concerned about sunset clauses – you should seek legal advice about your rights, including possible dispute resolution options and remedies if the seller seeks to terminate the agreement using a sunset clause.

“But my message to developers is that they need to do the right thing by Queenslanders and treat buyers fairly and reasonably.”

Member for Theodore Mark Boothman said the government needed to act quicker.

“If the Attorney General doesn’t agree with the practise, why not act now?,” he said.

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