The Importance of Understanding Sunset Clauses in Off-the-Plan Contracts

Buying property off the plan can be an exciting step toward home ownership or investment.However, these contracts often contain legal terms that buyers must fully understand before signing. One of the most important is the sunset clause.Knowing how it works can protect you from unexpected delays or contract terminations.

What Is a Sunset Clause?

A sunset clause sets a deadline for the completion of an off-the-plan property.It outlines the date by which construction must be finished and the title registered, allowing settlement to occur.

If the property is not completed by this date, the clause gives either the buyer, the developer, or both the right to terminate the contract.

Why Sunset Clauses Exist

Sunset clauses are designed to protect both parties:

• For buyers – They provide an exit option if construction is delayed beyond a reasonable timeframe.
• For developers – They provide flexibility in case of unforeseen delays, such as bad weather, supply shortages, or planning approval issues.

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Risks for Buyers

While sunset clauses can be fair, there have been cases where developers used them to cancel contracts, resell the property at a higher price, and leave buyers without the home they expected.

Key risks include:

• Losing the opportunity to buy at the original price
• Delays pushing your plans back months or even years
• Potential financial costs, such as higher prices in a rising market

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How Laws Have Changed

In some Australian states, including New South Wales and Victoria, laws now require developers to get buyer consent or court approval before ending a contract under a sunset clause.These changes aim to stop unfair terminations and protect buyers’ interests.

What to Check in Your Contract

When reviewing an off-the-plan contract, look for:

• Sunset date – The exact date construction must be completed by
• Extension rights – Circumstances under which the developer can extend the date
• Termination rights – Who can end the contract and under what conditions
• Refund process – How and when your deposit would be returned if the contract ends

How to Protect Yourself

• Get independent legal advice before signing
• Understand how long similar projects usually take to complete
• Ask the developer about their track record for meeting deadlines
• Be wary of contracts with long or unclear sunset periods

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Coposit and Off-the-Plan Purchases

With Coposit, buyers can secure an off-the-plan property with just $10,000 upfront and pay the rest of the deposit in weekly instalments during construction.While Coposit’s model makes entering the market easier, it’s still essential to fully understand your contract terms, including the sunset clause, to protect your investment.

Making an Informed Decision

Sunset clauses are a standard part of off-the-plan contracts, but the details matter.By knowing how they work, what risks they pose, and what legal protections apply in your state, you can buy with confidence and avoid costly surprises.