What is a sunset date and how does it work? Buying second-hand property is nothing new to buyers in Australia. Buying a house, apartment, or townhouse ‘off-the-plan’ means signing a contract to buy a property that is yet to be built.
A sunset date is a day a developer fulfils the final obligation prior to settlement and registers subdivision plans. If the developer is unable to deliver by the sunset date, either party may cancel the contract without a penalty.
If the developer is unable to deliver by the sunset date, either party may cancel the contract without a penalty.
This is also the date in a Contract of Sale when the buyer has the right to get their deposit back if the subdivision plans have not been registered. It is worth noting that the new subdivision plans for the development are the point in the construction timeline when the individual title is issued.
When talking about what is a sunset date, there are a lot of factors that can affect it, especially on an individual’s property. In this article, we’ll tackle what is a sunset date to have a better idea of it.
What Is A Sunset Date And What Can Happen?
If the developer fails to fulfil the contract terms by the sunset date, the purchaser usually has the right to cancel the contract and receive a full refund of the deposit that the buyer paid. This offers the buyer some protection against project delays.
A sunset clause is used to protect the buyer or seller and gives the party the option to leave the contract if things don’t go as planned. However, the sunset clause on a Contract for Sale can also be used by a developer to terminate the contract. Some dishonest developers activate the sunset clause when they find out that they can resell the property at a higher price.
This creates disputes and even disappointment for possible buyers, who may have been waiting for the completion of their properties in a given time frame. To prevent these dishonest developers from cancelling contracts unreasonably, the Australian government has introduced new legislation in New South Wales (NSW).
Under the Conveyancing Amendment (Sunset Clause) Act 2015, a seller is needed to give notice to all buyers, and these buyers must agree in writing before a seller can terminate a project. If a buyer doesn’t respond to this notice, then the seller cannot proceed with the termination of the contract.
Some factors are included when considering granting a developer permission to terminate a contract. These are:
- The terms in the contract for the sale of the off-the-plan property
- If the developer has been unreasonable or has acted out of spite
- If the value of the lot where the property is to be built has increased
- The effect of the termination on buyers and other significant information
When buying off-the-plan property, the sunset clause may also be useful since it can give the buyer the option to walk away if the project gets held up, while also getting their deposit back fully.
Typically, purchasers can pay a 10 percent initial deposit, with the balance of funds not due until the construction of the property is completed. Depending on contract terms, the developers and builders can also switch out current appliances and fittings for ones with newer and similar quality and can even make small changes to floorplans.
The Court will then consider termination proposals on a case-by-case basis. The proposed law also requires the developers to pay all transactions and costs that may be incurred during the termination process.
What Is A Sunset Date: Expiry
Anecdotally speaking, it is unusual that the sunset date lapses on a property. Let’s consider some reasons that this might happen. They are all to do with the action of the vendor and there isn’t really anything the purchaser can do to affect this.
When talking about what is a sunset date, it may expire if the builder runs out of budget or there are substantial delays in the construction. To avoid these problems, the buyer should also look at the past history of the developer and if they’ve completed past projects on time.
If the property is completed on time, the money contributes to the overall purchase price of the settlement. If the sunset date expires, then the buyer can retrieve it immediately following the expiration of that period.
If one is also asking what is a sunset date and can a buyer make it shorter? Frankly, no. The sunset date is the framework chosen by the vendor to ensure that the transaction with the buyer has an end date to it. Otherwise, the buyer’s deposit might go nowhere with the developers and builders who never completed the project that needs to be done.
The buyer would want to know at some point if the builder hasn’t completed the development so they can retrieve their deposit. With this being said, it is also unlikely that the developers and builders will bring that conclusion period forward for the reason of giving themselves a lot of time in finishing the project.
The Sunset Date Is Missing
When talking about what is a sunset date, it is not necessarily needed in a contract of sale. If a buyer is purchasing a property that has an individual title, the buyer won’t need to worry. However, when buying property ‘off-the-plan’ it is important to seek legal advice as sunset clauses are hidden discreetly under special conditions.
Importance Of Seeking Legal Advice
Now that we have a general idea of what is a sunset date and other factors affecting it, it is only important to seek legal advice when purchasing properties as dealing with developers and builders can be difficult when you are not aware of the various rules and clauses related to it.
Our property and conveyancing lawyers at JB Solicitors can aid you when purchasing ‘off-the-plan’ properties and going more in-depth in knowing what is a sunset date for your legal needs. What’s more, our fixed-fee prices give you a clear sense of cost and save you from your financial burdens.
Contact JB Solicitors today