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Hi everybody - George Sourris, Empire Legal.

Today's topic: Sunset Clauses QLD -what you need to know for off-the-plan purchases. 

We Queenslanders love a good sunset, especially when you live in beautiful Brisbane, Sunshine Coast or Gold Coast. However, a Sunset Clause is a totally different story. Some people have had horrible experiences. Let's explore deeper.

A sunset clause usually appears in an off-the-plan sales contract, and provides a right to terminate (or end the contract) in the event the contract cannot settle within a particular time frame.

Off-the-plan sales typically use custom, non-standard contracts, as the properties are yet to be registered or built, and the standard REIQ contract just doesn't cut it.

The purpose of a sunset clause is to allow an event, or multiple events to take place before settlement can occur - failing which the matter can be ended, usually without penalty.

For example, let's just say there was a subdivision of a block of land into 4 smaller lots, and there was a 12 month sunset date, and contracts from the 4 off-the-plan vacant land lots are signed.

If the developer cannot get the subdivision plan sealed by council and the land subsequently registered by the sunset date, then they can terminate the contracts, the matters are at an end, and the deposits are refunded to the buyers.

In Queensland, a Community Title Scheme (CTS) purchase, i. e. units, townhouses, etc within a body corporate, can have a maximum statutory sunset clause of 5.5 years, although this period is often shorter - closer to the 3 year mark, to allow events like construction to be completed, council approvals to be obtained, establishment of the body corporate, and then registration of the plan at the Titles office, to create the lots. 

For vacant land, the maximum sunset clause time frame is 18 months. If you're considering buying a residential property, we strongly recommend you obtain independent legal advice BEFORE signing a contract - especially when buying off-the-plan, or if a contract includes a special condition such as a sunset clause.

We offer pre-contract advice to review these contracts. The off-the-plan contracts are usually hundreds of pages long and need careful review of each clause, as they are often bespoke and drafted by solicitors on behalf of the developer. You need an expert to check there's no nasty surprises or traps that could cost you extra money, not to mention time and stress.

 New property law reforms were introduced on 22 November 2023, to strengthen buyer protections under the Land Sales Act. The new laws limit when sunset clauses can be used to terminate off-the-plan contracts for the sale of land - not including Community Title Schemes, i.e. apartments, or subdivisions under 5 lots.

So we're talking about vacant land sales here only. Sellers, who are often property developers, can ONLY use the sunset clause to terminate off-the-plan contracts for sale of land in the following situations: 

1) with written consent of the buyer of the land, 
2) under an order of the Supreme Court; or 
3) in other limited scenarios prescribed by Regulation.

 These new laws apply to: 

1) existing off-the-plan contracts of the sale of land that was signed but not settled by 22 November 23; and 

2) new off-the-plan contracts for sale of land signed on or after 22 November 23. The property reforms also confirm sellers CAN'T get access to any deposits paid under off-the-plan contracts.

Deposits paid under off-the-plan contracts can only be released from a trust account to sellers at the time of settlement, or if the contract is otherwise finalised and the seller is entitled to the deposit.  These laws have been brought in to protect consumers and stop developers from unreasonably delaying the registration of these subdivisions.

 For example - over COVID we saw a lot of developers dragging their feet and not registering the lots by the sunset date. Then once the sunset date had passed, they elected to terminate the contracts and resell for a higher value.

This is obviously not fair for the buyers - who have paid deposits, sat patiently waiting, and probably engaged builders, paid for soil tests, etc, in preparation for their new home built. Always do your research. Pick a reputable developer or builder that has a track record of honesty, good workmanship, and results.

Don't get sucked in and just risk it. It could quite literally cost you your life savings. Give us a call, we can help steer you in the right direction and make sure the experience of navigating the sunset clauses and off-the-plan contracts are as stress free as possible.  

We've been the preferred buyer solicitors for multiple off-the-plan developments across Brisbane and would love to help Queensland buyers navigate this tricky area of the law.

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George Sourris. Empire Legal.

If you have any questions, you can email me: george@empirelegal.com.au. 

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Ladies and gentlemen, please keep in mind that all advice is general in nature and does not constitute legal advice. This is authorised by George Sourris, Empire Legal, Brisbane, Queensland, Australia.

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Note: all information is general in nature and as each matter is unique please contact our office for tailored advices: the above does not constitute legal advice.