Sunset dates and termination clauses in off the plan contracts

  • Blog
  • Sunset dates and termination clauses in off the plan contracts
View All Articles

Scroll for more

Buying off the plan traditionally gave buyers a chance to settle later, but at today’s prices. Developers were able to develop a land subdivision or a block of units based on finance enabled by the majority of lots being pre-sold. We have covered off the plan contracts generally before here.

One of the major features of any off the plan contract is the sunset date. This is the date after which the buyer can walk away and get the deposit back if settlement hasn’t happened.

The main reason for a sunset date is to allow buyers to be able to move on and buy elsewhere without being stuck in an endless contract if there are delays in a project.

Queensland law sets the maximum sunset date at 18 months for land, and a very long 5½ years for units.

The parties can agree on a shorter sunset date, and this would be put into the contract. However, the contract often allows a seller to extend the sunset date past the shorter agreed date, if there are delays outside the developer’s control.

Another feature of most off the plan contracts is a clause allowing the developer to terminate the contract. Sometimes, these clauses limit the developer’s ability to do this to specific situations such as the developer being unable to get finance approval for the project. 

However, sometimes you see a clause which allows a developer to walk away from the contract for any reason. The deposit is refunded to the buyer, but this is cold comfort if the buyer has been waiting a long time and has missed other opportunities to buy elsewhere. 

It is not unknown for developers to use these termination clauses to crash a contract and then re-sell the lots for a higher price.

This is especially a factor in a booming property market such as the current one. It highlights the need to get experienced legal advice to enable negotiation and amendment of clauses such as this.

Currently there is a Queensland Supreme Court case in progress where a homebuyer is challenging the validity of the developer’s termination of her contract under the termination clause. There are four buyers involved in separate court proceedings against a Eumundi developer. 

The contract was signed in 2017, and the 18-month sunset clause date sunset date expired in December 2018.

On 16 July 2021, the developer terminated the contract. The property was registered on July 21, 2021, only five days after the 16 July termination.

The developer denies the buyer’s claims that it engaged in “misleading and deceptive” conduct after the December 2018 sunset date.

The Supreme Court of Queensland documents note emails from the developer between December 2018 and early July 2021 on progress updates.

The buyer claims she has lost her position in the market after she signed the contract to buy the land in 2017 for $255,000, saying that the block would now be worth $500,000.

The buyer is seeking to force the developer to honour the contract, and is also seeking damages including rent of $15,000.00 paid by the buyer over the delay period.

The developer is defending the claims in court and has said that the termination of the contract was valid and effective.

As lawyers love to say, each case depends on its own facts, but this case is an example of the importance of being aware of your position before you sign a contract.

FC Lawyers are very experienced in giving pre-contract advice. Please let our property law team know if you need any help discussing sunset dates or off the plan contracts by contacting us today!

The information provided in this article is for general information and educative purposes in summary form on legal topics which is current at the time it is published. The content does not constitute legal advice or recommendations and should not be relied upon as such. Whilst every care has been taken in the preparation of this article, FC Lawyers cannot accept responsibility for any errors, including those caused by negligence, in the material. We make no representations, statements or warranties about the accuracy or completeness of the information and you should not rely on it. You are advised to make your own independent inquiries regarding the accuracy of any information provided on this website. FC Lawyers does not guarantee, and accepts no legal responsibility whatsoever arising from or in connection to the accuracy, reliability, currency, correctness or completeness of any material contained in this article. Links to third party websites or articles does not constitute any endorsement or approval of those sites or the owners of those sites. Nothing in this article should be construed as granting any licence or right for you to use that content. You should consult the third party’s terms and conditions of use in relation to any third-party content. FC Lawyers disclaims all responsibility and all liability (including liability for negligence) for all expenses, losses, damages and costs you might incur as a result of the information being inaccurate or incomplete in any way. Appropriate legal advice should always be obtained in actual situations.

WE’RE HERE TO HELP

Prefer to get in touch?

With offices in Brisbane, Sunshine Coast and Sydney, our team is well equipped to provide both advice and support across a broad range of legal areas.

phone-icon
Free call 1800 640 509
  • This field is for validation purposes and should be left unchanged.