Let's talk sunsets

In Off the Plan Contracts, typically there is a ‘Sunset Date’.

So, what exactly is a sunset clause?

Well, when it comes to off the plan properties, there's usually a sunset clause included in the contract. Its purpose is to protect both the buyer and the vendor. The length of a sunset clause can vary.

Why have a sunset clause?

It adds some certainty to the development by giving buyers an expected completion date. It also allows developers some flexibility in case of unexpected delays, like adverse weather conditions or factors beyond their control. It's worth noting that most developments are likely to be finished before the estimated completion date, but the sunset clause acts as a safety net, providing the maximum time it could take to complete.

Sunset Clauses: Things to watch out for:

While they are meant to protect both parties, there are cases where developers misuse the sunset clause for their own advantage. For example, a developer intentionally delays the project beyond the sunset date. This allows them to terminate contracts with existing buyers who would receive their deposit back, while they sell the properties to new buyers at a higher price. This can happen when the property market is booming, and it's not good news for buyers who miss out on the opportunity and have their money tied up for a long time.

5. To reduce the risk, here are a few steps you can take:

a) Check the length of the sunset clause and ensure it provides a reasonable timeframe, considering potential delays.

b) Look for projects that already have planning approval, as it indicates a higher likelihood of the project proceeding.

c) Conduct background checks on the developer. Look into their past projects and see if they have a track record of delivering on time. Working with a reputable developer is crucial for the quality and timely completion of the property.

6. What happens if the development runs over the sunset date?

In that case, the buyer has two options:

a) Terminate the contract and receive their full deposit back.

b) Organise new contracts with the developer if both parties agree on the original pricing and terms. So, if you're considering buying an off the plan property, it's wise to consult a conveyancer or lawyer experienced in these types of contracts. We can carefully examine the contract and assess the fairness of the sunset clause in question.

When you buy a property, particularly a property off the plan there are many things you need to consider and check, and one such item of importance not to be overlooked is the sunset clause. Here we break down everything you need to know about sunset dates.