With so many new apartment towers spring up along the beaches of the Gold Coast and the inner city suburbs of Brisbane, our conveyancing solicitors have seen a big increase in off-the-plan contracts as buyers look to grab an apartment in these new developments.
A key contract clause to most off-the-plan contracts is what is termed a Sunset Clause.
What is a Sunset Clause?
Essentially a Sunset Clause, in terms of off-the-plan contracts is a clause that refers to the maximum time in which the seller has to complete construction of the property and settle the contract.
In most cases a Sunset Clause is inserted for the benefit of a buyer, to avoid them being tied to the contract indefinitely. The time the seller has to complete a property will vary with each development and take into account factors such as its size and complexity. If the seller fails to complete the property within the time frame specified then the buyer is legally entitled to terminate the contract and receive their deposit back in full.
In most instances the Sunset Clause is drafted in a way to allow for an exaggerated time frame to provide the seller with ample time to complete construction, taking into account delays that may pop up such as wet weather, funding delays and industrial action.
Obviously all off-the-plan contracts contain an element of risk and there have been instances of developers taking advantage of a Sunset Clause to terminate the contract on the buyer and later on-sell the property for a profit.
If you are considering buying a property off-the-plan, prior to entering into the contract of sale it is important that you do your due diligence on the seller and developer, looking at past projects to see if there have been any Sunset Clause issues.
A project may also be delayed if the proper approvals and permits are yet to be secured from the council in regards to the construction of the property. If these approvals are not yet in place they can cause lengthy delays and have been known to trigger Sunset Clauses.
As an off-the-plan contract is more complicated and lengthy than a standard contract of sale, it is always a good idea to have a conveyancing solicitor review the contract prior to you signing it. Your solicitor will be able to review the Sunset Clause and advise you accordingly.