Sunset clauses in off-the-plan contracts have a patchy history. In the mid-2010s, a wave of Sydney developers used them to rescind contracts on completed apartments — only to relist the same properties at higher prices. The resulting legislation, the Conveyancing Amendment (Sunset Clauses) Act 2015, significantly restricted what developers can do unilaterally under these provisions. The legal framework has changed. But buyer psychology around sunset clauses has not always kept pace.

What a Sunset Clause Actually Does

A sunset clause sets a date by which the property must reach a specified milestone — typically registration of the strata plan or issue of the occupation certificate. If that milestone is not reached by the sunset date, either party can withdraw from the contract without financial penalty, and the buyer’s deposit is returned.

In the current legislative environment, a developer cannot simply invoke a sunset clause to exit a contract because prices have risen. They must either obtain the buyer’s written consent or seek a Supreme Court order — and the court will grant that order only if rescission is just and equitable in all the circumstances, including whether the developer acted reasonably and in good faith.

How Buyers Are Leveraging the Clause at the Contract Stage

First-home buyers working with a vendor advocate or experienced conveyancer are increasingly negotiating the terms of sunset clauses rather than accepting them as boilerplate. This means pressing for realistic sunset dates that allow adequate time for construction without giving developers an indefinite runway. It means seeking clarity on exactly which events trigger the clause — for example, occupation certificate vs strata plan registration can have meaningfully different timelines.

It also means negotiating for milestone disclosure — requiring developers to report construction progress against agreed stages so buyers are not left in the dark about whether the sunset date is likely to be met.

Using the Sunset Period for Financial Positioning

The period between exchange and the sunset date — which can be two to four years for major developments — is a time a buyer can use to strengthen their financial position. Savings can grow. Debt can be reduced. Borrowing capacity can improve. For first-home buyers who have stretched to secure a deposit on an off-the-plan purchase, this extended window is a genuine advantage: it provides time to build financial resilience before the mortgage begins.

If the development does not proceed and the sunset clause is invoked, the buyer exits with their deposit intact and — in the best case — with a stronger financial position than they had at exchange.

The Risk of Relying on Off-the-Plan Valuations

Off-the-plan properties are contracted at today’s price but settled at tomorrow’s value. If the market has moved downward by the time of settlement, the valuation obtained by the lender may come in below the contract price — leaving the buyer to fund the shortfall out of pocket or renegotiate with the developer. This is an inherent risk of the off-the-plan model and should be factored into any purchase decision.

Buyers purchasing in a cooling market should be particularly attentive to this risk and should discuss valuation scenarios with their broker before committing.

For a clear explanation of off-the-plan contracts and buyer protections, the NSW Government’s overview of off-the-plan purchasing and sunset clause legislation provides useful reference material regardless of which state you are purchasing in.

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