Buyers in Kokomo Gold Coast offered sunset date extension at substantially higher prices
Buyers in a major unit development fear their contracts are about to be torn up, forced to live in caravans as near-finished apartments sit idle and told they need to stump up more cash.
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Buyers in a 64-unit development fear their contracts are about to be cancelled, with the site of their nearly-finished apartments sitting near idle for almost six months and sunset clause dates looming.
Some say they’ve lost hundreds of thousands of dollars in capital gains and rent, with one couple living for five months in a caravan while waiting for their apartment to settle.
Meanwhile, the developers maintain the delays are beyond their control.
The riverfront Kokomo development, at Carrara on the Gold Coast, was initially due for completion in mid 2023, with buyers signing contracts in 2021 and 2022.
Now they’ve been told they’ll have to find up to $1m on top of their original prices if they want to keep the apartments as contracts are approaching “sunset dates”, legally allowing them to be scrapped if construction has not been completed.
The two-tower, six-storey project is being developed by BrickStone Development, which is directed by Brisbane businessmen Michael Plozza and Zhengfeng Alex Guo.
The site is owned by Mr Guo, who paid $4.35m for it in 2013, property records show.
For retirees David and Lyndal Potter, the uncertainty and financial losses have proven too great, with the pair opting to cancel their own contract this week.
The Potters signed up for a three-bedroom apartment for $878,000 in 2022, hoping to live out their golden years in the riverfront home from 2023.
Eagerly anticipating the move, the couple sold their house and moved into a caravan – not expecting they’d be living in it for five months.
As time dragged on without settlement, they rented a house, still hopeful of moving into their apartment.
But their dream was dashed when they received a letter offering to extend their sunset clause – currently due in March next year – but only if they handed over an extra $372,000.
“That would have taken our apartment price to $1.25m,” Mr Potter said.
“I’m an old Vietnam veteran, I don’t have that sort of money.
“I wanted to be in the fight, I felt it was a good fight, but the fight was going to cost us money we didn’t have.
“My wife and I decided to bite the bullet and get out of the contract.”
Mr Potter said the development company had promised to return their deposit.
The couple say they lost potential gains on their previous house – which sold for $200,000 more a year after they sold it – and had paid months of unexpected rent.
“It’s actually been shocking,” Mr Potter said.
“I’m no accountant but I think the developer stands to make an extra $50m to $100m if the contracts are cancelled and they can resell.”
Another buyer, whose name has been withheld from publication, said he’d watched as larger and more complex builds started and finished in the time he’d waited for his apartment to settle.
“I sold my properties three years ago and have been renting ever since,” he said.
“No-one has been working on the site for months and now they’re saying they’re not going to have it finished until mid 2026.
“All the units need is a bit of glass in the bathrooms and they’ll be complete – but hardly any work has been done all year.”
Plans for the project – originally named Riverfront Residences – were first submitted by another of Mr Guo’s companies, QY Developments.
Apartments were marketed for sale as far back as 2018, with starting prices at $489,000.
They’re currently listed from $970,000.
It’s being built by another Guo company, BrickConstructions, which holds a category five licence with the QBCC.
Under the development approval, Kokomo’s developers are required to upgrade a sewerage pipe and pump station on Nerang-Broadbeach Rd – a requirement flagged in November 2023.
Buyers say the company took too long to inform them of the delay related to the sewerage work.
A statement from BrickStone refuted that claim, saying the sewerage work delays were beyond their control and they were making “consistent progress” to resolve them.
“Buyer communications throughout this period have been frequent and transparent, always based on the most accurate information available at each stage,” the statement said.
“The sewer solution requires multi-agency co-ordination, design reviews, Council and TMR approvals, and infrastructure agreements.
“These are complex processes outside the developer’s sole control.”
BrickStone said it was “doing everything within our power to deliver the project in full compliance with our contractual obligations, despite infrastructure and regulatory challenges that have been outside of our control”.
“We understand and empathise with the frustration that some buyers are experiencing due to the protracted delays,” the statement said.
“We still remain committed to reaching settlement with all current buyers.
“It is also important to note that the developer has suffered substantial financial impact as a result of the delay.
“Any suggestion that we have sought to deliberately delay settlement is simply untrue – we have every incentive to deliver as quickly as possible and have continued to push for interim solutions to mitigate these challenges for all parties involved.”
Paul Arthurs, CEO of Queensland Sotheby’s Intl Realty, said his agency had “always communicated with buyers and potential buyers with full disclosure and transparency to information provided to us from the developers”.
“Further, the developers have been most proactive in sharing regular updates on construction and progress through the process,” he said.
Mr Arthur denied new potential buyers – coming in at much higher prices – were being prioritised over existing ones.
“Our primary focus at this time is with the existing buyers, helping them through the process, up to and including settlement,” he said.
“Our current contracted buyers remain our top priority.”
Kokomo is just the latest project impacted by sunset clauses, which were designed to allow either party to a sales contract to terminate of construction wasn’t completed in time.
But soaring property prices have turned them into a legal way for developers to cash in on a hot market, leaving many off-plan buyers completely priced out.
However, one developer who used the clause to cancel a contract and double the price has come off second best.
Cav Gasworks Pty Ltd, a company owned by developer Damien Cavallucci, was ordered by the Chief Justice of the state’s Supreme Court to pay $6.1m to the buyer of two sub-penthouses in the Luminare building in Newstead.
Cav Gasworks was found by the court to have reneged on the $4.2m off-the-plan sale to Ms Jiang in 2017 and on-sold both lots for $8.8m to other people after invoking the sunset clause in 2023. This second sale was more than double the purchase price under Ms Jiang’s contract.
In her decision handed down on Thursday June 12, Chief Justice Helen Bowskill ruled Cav Gasworks Pty Ltd’s purported termination of the contract, on 13 April 2023, in reliance upon the sunset clause, “was unlawful, invalid and of no effect”.
Attorney-General and Minister for Justice and Minister for Integrity Deb Frecklington said the government was looking to review sunset clause laws but would not specify how or when the review would occur.
“Buying a property is one of the biggest financial investments many Queenslanders will ever make, and the Attorney-General appreciates the huge disappointment when an off the plan contract is terminated through a sunset clause,” she said in a statement.
“The Crisafulli Government remains committed to undertaking a review of the effectiveness of the sunset clause amendments.”
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