Sunset Clauses in NSW

2 min read
Sunset Clauses

There has been a great deal of media attention in recent months about sunset clauses in property contracts. The stories usually involve a developer has relied on the ‘sunset clause’ in a contract to get out of the deal, resulting in a significant loss to the purchaser, who has wasted years locked into the contract and lost the substantial equity they would have gained had they owned the property at the end of the build. The developer is then able to on-sell the property for a much higher price than the initial purchaser would have paid due to the ever-increasing value of property in recent years.

‘Sunset clauses’ are very common in property contracts involving a subdivision of some sort, and sometimes also include a house or unit as well (known as ‘off the plan’ purchases’). A standard sunset clause allows the purchaser and the developer to exit the contract without penalty after a certain period of time has elapsed on a future date (the sunset date) if the development has not yet been completed. Sunset dates can usually be extended by the developer if they or the builder have encountered delays due to factors outside of their control, such as weather or supply issues.

Sunset clauses are a protection for purchasers as well, so that they are not strung along for years and years by the developer if the project is not completed in a timely manner.

Most of the media attention has focused on situations outside of NSW, where either party may exit the contract once the sunset date comes along without the consent of the other party and no justification for the decision is required.

In NSW, however, legislation changes which took effect on 2 November 2015 mean that a developer wishing to exit the contract using a sunset clause needs to notify the purchaser and provide reasons for their decision. A purchaser would then need to agree before the developer can be released from the contract. If the purchaser does not agree, then the developer would need to apply to the Supreme Court to seek an order allowing them to exit the contract. This legislation also applies to contracts entered into before 2 November 2015 but which have not settled or been completed.

If you’re looking to purchase a property, we would be pleased to assist you to understand the terms of the contract and assist you through the conveyancing process.

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Picture of Authored By<br>Jennifer Jennings

Authored By
Jennifer Jennings

Director Lawyer, PBL Law Group

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Jye Hall
Anita Bradley has been an absolute dream to deal with. Anita's conveyancing skills and knowledge knows absolutely no boundaries along with her effective communication skills which has made selling and buying a completely stress free exchange for us. We recommend PBL Law to everyone looking for outstanding service. We will definitely be returning clients.
Kushlan Aluwihare
PBL Law Group were fantastic. Anita from PBL worked with us closely during our property search and made the exchange and settlement process smooth and stress free. Highly recommended.
Gail Whitford
PBL handled my late mothers estate, they were very obliging and patient with any and all questions that we had, thank you to David , Sharon and the other staff that we dealt with, everyone was so easy to talk to and friendly .David came to the home where my Mother was living and helped her to get her will in order, Sharon helped us through the process of executing her wishes when the time came even doing a house call which was so much easier, thank you all so much
S M
I have experienced an excellent service from PBL (especially from Anita) during the sale of my recent property on Central Coast, and during the purchase of our current property in Sydney. Throughout many challengers, especially with the sale, Anita presented her very professional and knowledgeable conveyancer, positively solving all obstacles. "Above and Beyond" Award going to Anita!!! :-)
Amanda Reitzin
The five-star reviews are well-deserved. I needed a motion and a bylaw drawn up for urgent repairs of my strata unit and the AGM was in two weeks' time. My solicitor was friendly, efficient, knew what documents to ask for, and had all the paperwork prepared well within the timeframe. She also took the time to run through all the legalese and the different possible scenarios with me to make sure I understood. I am so glad to have found this firm and I will not hesitate to use their services again in future if the need arises.
Ricky Cooper
Anita is amazing! So attentive, approachable and communicates everything every step of the way. I have now bought and sold property with Anita and I cannot recommend her highly enough.
Ron Thomsen
Our Commercial Property conveyancing was handled very professionally. Anita’s experience and responsiveness was an asset in this transaction.
Trace M
I am so grateful for Anita Bradley from PBL Law Group helped me with this property settlement, she has went above beyond to ensure I understand everything because of our deafness. I will recommended Anita or their team. Thank you so much for all the hard work you have done for us.
Tricia Wheatstone
For almost 18 months I have been a client of Alex Ilkin. Alex is very knowledgeable and professional and has consistently provided me with thorough, honest and well set out advice, including steering my case through appeal proceedings. He always worked for my best interests with integrity and compassion. I recommend Alex and his team at PBL.