Buying an off the plan apartment - Keep an eye on the sunset date

A recent court ruling could mean that the new Sunset Clauses Law has made it almost impossible for property developers to use sunset clauses to end off the plan purchase contracts.

Sunset clauses are included by property developers in off the plan sales contracts so as to limit the property developer's risk that it might be locked into a fixed price contract.

They are useful if the building is not completed within the 2 to 5 year sunset period because of difficulties with approvals and construction finance, and delays because of inclement weather, unavailability of tradesmen and building materials.

To counter opportunistic property developers who go slow on the construction work to allow them to end the contract using the sunset clause if property prices rise during construction, the NSW Government introduced the sunset clauses law on 2 November 2015. It applies to pre-existing contracts, as well as to new contracts.

In a recent decision of the Supreme Court of NSW, the new law has passed its first test with flying colours. An opportunistic property developer was not able to end an off the plan contract using the sunset clause because they could not show that it was just and equitable to do so.

For more click The new Sunset Clauses Law passes its first test