Sunset Clause

The infamous sunset clause, and the information you need to know about it.

What is a sunset clause? Do I need to know what it is, and why do I need one?

In almost every off-the-plan purchase, a sunset clause will be present in the negotiation.

This sunset clause specifically and clearly outlines the particular date and/or timeframe in which the vendor/builder/developer has to have the development built by. This is a contractual agreement, and should be taken very seriously. The obligation ensures that everyone knows what is expected and when it is expected.

The benefits of a sunset cause is that it:

• allows the developer to achieve certain level of pre-sales
• it gives you a date to expect when you can occupy and settle in your new property. If your project isn’t completed on time, you are allowed to walk away from the contract as well as receive your deposit back.

What are the obligations?

• Fully understanding the obligations set out in a sunset clause is pivotal to grasping its concept.
• a contract with a sunset clause means the contract can be terminated before the dominated settlement date at the expiry of the clause - ie, you can walk away if the promised date isn't fulfilled.
• after the contract expires, developers may attempt to resell the same property to you at an inflated price
• if a sunset clause date is extended to after the initial expected complete date, but the development is completed within that extend period, you as a buyer must settle at the agreed purchase price.

To assess if this sunset clause is appropriate and realistic, weigh up how far into construction the development is when you sign the contract, and what needs to happen, now and in the future, for you to reach that agreement.