A group of apartment buyers are pleading with the NSW government to help break their contracts after purchasing off-the-plan units in a Parramatta development where defects were recently discovered.
NSW Fair Trading issued developer Hassall Developments with a Prohibition Order in early July, demanding the company rectify a number of defects in its Imperial Towers development in Hassall Street, Parramatta.
Many buyers had paid deposits of about 10 per cent for their new apartments, up to five years ago.
While a Prohibition Order was issued by NSW Fair Trading on July 1, preventing the developer from registering a strata plan, it was replaced three weeks later with an order that did not contain that specific clause.
The change paved the way for the developer to be able to register a strata plan by the end of the month, making the contracts binding within 14 days.
Cynthia Huang paid tens of thousands of dollars in 2016 for a deposit on her dream apartment in the twin-towers development and said she was devastated when she first heard there were problems with the buildings.
“I saved for a long time for this and for my future home,” she said.
“Those defects are about structural problems that can cause safety hazards and I can’t imagine how this could happen to me.”
Ms Huang said she grew even more concerned when she saw the original Prohibition Order was re-issued, allowing the developer to register the strata plan.
“I felt protected by the initial order but when I saw the second [order] I was disappointed and stressed,” she said.
“We as a buyer can’t say no to the contract.”
Ms Huang said she was not able to terminate the contract and receive a refund for her deposit, nor could she move into her apartment as the development was not considered complete or habitable until an Occupation Certificate was issued.
“I’m so disappointed and so distressed because the new order leaves us in an extremely vulnerable situation.”
In December, Fair Trading inspectors documented a number of issues in the building, including waterproofing inadequacies, problems with the structural steel frame connections in the basement and that the building was “not adequately protected from fire spread”.
Ben Xue also bought off the plan and said he was worried to be locked into a contract “forever”.
“My solicitor said if they register the strata plan, I won’t get out,” he said.
“It’s very hard for us to find another purchaser.”
The developer behind the project, Hassall Developments, is a subsidiary of Sydney-based Merhis Group and is in talks with the Office of the NSW Building Commissioner about fixing the defects.
Greens MP David Shoebridge, who is chairing an Upper House inquiry into the regulation of building standards, said new laws should be considered to allow buyers to exit when defects were present.
Mr Shoebridge met with around 10 Imperial Towers buyers via Zoom and said the purchase had been significant.
“For many of them, this was their first home, this was their first home in Australia as well, and they felt absolutely trapped,” he said.
“I firmly believe the law needs to provide a better remedy for purchasers so that if they’re trapped in a contract like this, there’s a pathway to get out of it — to get their deposit back and get on with the rest of their life.”
Mr Shoebridge said fundamental change needed to happen, so buildings were not built with defects in the first place.
“We need quality control from day one.”
A spokesman for NSW Fair Trading said it was likely a deal would be struck with the developer — requiring the company to rectify the defects and provide a cash guarantee for any problems which may arise in the future — before the order was lifted.
A similar landmark deal was struck with developer Toplace last month over the new Skyview apartments at Castle Hill.
“Due to the nature of the defects at Hassall St, the Building Commissioner anticipates that an undertaking backed by financial guarantees may be put in place to give future owners certainty if major defects arise after they move in,” said the spokesman.
“When NSW Fair Trading made a ground-breaking arrangement with Toplace to guarantee the Skyview development, the Minister foreshadowed we would be prepared to enter into similar arrangements with other developers and we are not ruling anything out in this instance.”
The spokesperson said Fair Trading had examined several contracts and it appeared some owners would be eligible to rescind under the sunset clause, but some would not.
“Matters relating to individual contracts should be discussed between the developer and the individual, who is encouraged to seek legal assistance if they are dissatisfied with the outcome,” the spokesperson said.
“Our focus is to ensure that developers hand over a property that is suitable for occupation.”
Hassall Developments director Abbass El-Zein told ABC News buyers would not be required to complete the purchase until an Occupation Certificate was issued.
“Once the lockdown is over and the Building Commissioner’s Office can complete their inspections, we believe that all defects will have been addressed and the purchasers will not be disadvantaged,” Mr El-Zein said.
“All defects will be remedied by the time that final inspections are carried out post the COVID lockdown.”
He said several independent experts had been engaged and were carefully reviewing and responding to all issues.
“Apart from the current public health order delays, no purchaser will be disadvantaged,” he said.
“On the contrary, the Building Commissioner’s involvement should give them extra comfort that their rights are protected.”