Overview
Sunset clauses are common features in off-the-plan property contracts across Queensland. These clauses stipulate a final date by which the property must be completed and settlement finalised. If this date—known as the “sunset date”—is not met, the clause can allow either the buyer or the developer (or both) to legally terminate the contract.
While originally intended to protect both parties from indefinite delays, sunset clauses are increasingly being criticised due to their misuse, particularly by developers during property booms to re-sell properties at higher market prices.
Key Features of Sunset Clauses
- Completion Requirement: Property must be completed and settlement finalised by a specified deadline.
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Termination Rights: If the sunset date passes without completion, the clause can allow one or both parties to cancel the contract.
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Refund: Buyers are generally entitled to a full refund of their deposit upon termination.
How Developers May Misuse Sunset Clauses
- Developers may intentionally delay construction or fail to settle, triggering the clause.
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Contracts can be cancelled so the property can be re-sold at higher market value.
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While legal under current laws, this behaviour is often seen as unethical.
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There is growing public pressure and political debate calling for reforms to protect buyers.
Risks and Recommendations for Buyers
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Review Contract Terms Carefully: Determine who can invoke the clause.
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Legal Advice is Crucial: Seek legal guidance to identify unfair terms.
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Research Developer’s Track Record: Ensure they have a timely completion history.
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Check Timeframes: Make sure the sunset date is realistic for the project type.
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Finance Considerations: Align loan pre-approvals with projected settlement dates.
Recent Queensland Case Studies
1. Marine Quarter, Southport (Gold Coast)
The Marine Quarter project faced significant delays due to the collapse of builder GCB Constructions. Subsequently, Groupline Constructions was appointed to complete the first tower. Some buyers reported being asked for additional payments, with threats of contract cancellation under the sunset clause if they refused
Further Reading:
2. Parkview Green, Hillcrest (Brisbane)
Aleksandra Drapinska and her husband signed a contract in August 2021 to purchase land at Parkview Green for $306,000. Due to infrastructure delays, the developer, Lark Property Development Pty Ltd, invoked the sunset clause in March 2023 to terminate the contract, leaving the couple financially disadvantaged.
Further Reading:
3. Midwater Tower, Main Beach (Gold Coast)
The Midwater project encountered delays due to a payment dispute between developer York Property Holdings (part of the Heran Group) and builder Tomkins Commercial. Buyers were asked to agree to a 37.5% price increase or face contract termination under the sunset clause.
Further Reading:
4. Queen’s Wharf, Brisbane
Developers Chow Tai Fook Enterprises and Far East Consortium cancelled hundreds of apartment sale contracts at Queen’s Wharf due to cost blowouts. They sought a 12.5% price increase, with the sunset clause enabling contract termination if construction extended beyond the specified deadline
Further Reading:
5. Burrell Avenue, Eumundi (Sunshine Coast)
A couple’s contract for a hinterland block in Eumundi was terminated nine months after signing, as developers Solst Pty Ltd activated the sunset clause. The couple, having sold their previous property in anticipation, were left without a home and faced challenges re-entering the market due to rising prices.
Policy and Legal Developments
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Queensland introduced legislation in 2023 offering limited protections for buyers, primarily in land-only sales.
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However, these protections do not yet apply to off-the-plan house-and-land packages as seen in New South Wales, Victoria, or the Australian Capital Territory.
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Calls are increasing for expanded legislation to close these gaps and prevent clause misuse.
These cases underscore the importance of thoroughly understanding the terms of sunset clauses in property contracts and seeking legal advice to navigate potential risks.
Sunset clauses, while intended as protective measures, have become controversial due to their exploitation in hot property markets. Buyers are urged to review contract terms carefully, seek professional advice, and advocate for stronger consumer protections. Legal reform is gaining traction, but caution and diligence remain essential.
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Disclaimer: The information provided in this blog is for general informational purposes only and does not constitute legal, financial, or professional advice. While we strive for accuracy, we make no guarantees regarding the completeness or timeliness of the content. Always seek independent advice before making any financial or real estate decisions. We are not liable for any loss or damages arising from your reliance on the information provided.
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