Will a sunset clause steal your sunshine? Know your rights when buying off the plan land in Queensland.

Buying land off the plan can be the start of an exciting home construction or investment property journey, but long settlement timelines and project delays can bring uncertainty especially when a sunset clause notice arrives from the developer.


What is a sunset clause?

A sunset clause in an off the plan land contract sets a deadline (the sunset date) by which the land developer must complete key steps such as registering the plan of subdivision and obtaining title to the land. If registration hasn’t occurred by the sunset date, the contract can potentially be terminated.

A sunset clause can protect buyers from being locked into a contract for too long but has in the past been used by some developers to unreasonably terminate contracts when the value of the land has significantly increased.

The law in Queensland changed in 2023 limiting developer rights to terminate a contract after a sunset date has expired in off the plan land sales (but not for sales of community title lots). You can read more about these law changes in our earlier blog linked here: lawlab.com.au/blog/buyers-now-have-more-protection-in-off-the-plan-land-sales-in-queensland


What is a sunset clause notice?

A sunset clause notice is a written notice from the land developer to the buyer (or their lawyer) at least 28 days prior to the sunset date advising the following:

• That the developer proposes to terminate the contract on the sunset date;
• That the developer may only terminate the contact under the sunset clause if the buyer consents in writing to the proposed termination;
• The developer’s reasons for proposing to terminate the contract;
• That the buyer must respond to the notice no later than the day before the sunset date.
  
  

What should you do if you receive a sunset clause notice?

Receiving one of these notices can be worrying but it does not mean your contract is automatically ending. Here's a checklist of what to do:

1. Read the notice carefully - note the sunset date, the deadline, and the developer’s reasons for termination.
2. Seek legal advice promptly - you do not have to consent and may have strong grounds to withhold consent, especially if the developer’s reasons are unjustified.
3. Evaluate your position - consider the market, your personal circumstances, and whether it makes sense to proceed with the contract and consent to it being terminated.
4. Don’t ignore it!! You should respond in writing (through your lawyer) before the deadline, as a failure to do so could impact you later.
   
   

What happens if you do consent?

If you do consent to the termination then you will be entitled to a refund of your deposit paid plus any interest earned on any investment of the deposit.


What happens if you do not consent to the contract termination?

If you do not consent to the termination then the developer will need to obtain an order from the Supreme Court before they can terminate the contract. This will not be an easy process for the developer and they would need to satisfy the Supreme Court that it is just and equitable to terminate the contract in the circumstances. The Supreme Court would need to consider a number matters, including whether or not the developer had acted reasonably or in bad faith, whether or not matters beyond the developer's control affected their ability to settle the contract, and whether or not the land has increased in value.

The developer must pay the buyer’s costs in relation to any Supreme Court proceeding unless they satisfy the Supreme Court that the buyer unreasonably withheld consent. Therefore if you do not consent to the termination you should consider providing particular reasons for withholding consent.


So …. don’t let a sunset clause stop you from seeing the sunset from your future home or investment!

Jeeva Ajimon

Jeeva is a solicitor at Lawlab with a Certificate IV in Real Estate with a passion for property law and a commitment to delivering clear, practical solutions for her clients. Drawing on her experience across both the legal and real estate, she brings a grounded, client focused approach to every matter she handles, ensuring her clients feel confident and supported throughout the process. Outside of work, Jeeva holds a black belt in Tang Soo Do and loves hosting dinner parties.