What is a Sunset Clause?

Sunset clauses are standard in off-the-plan contracts across Australia. They exist to protect both parties: the buyer is not locked into a contract indefinitely if the development is delayed or never completed, and the developer has a defined timeframe to deliver the project. However, sunset clauses have been subject to significant abuse, prompting legislative reform in several states.

How Does a Sunset Clause Work?

When you sign an off-the-plan contract, it will include a sunset date — typically 18 months to 5 years from the contract date, depending on the size and complexity of the development. If the property is not registered and ready for settlement by that date, the sunset clause is triggered.

Developer Abuse of Sunset Clauses

In rising property markets, some developers deliberately delayed completion to trigger the sunset clause, rescind contracts with buyers who had locked in lower prices, and resell the units at higher market values. This practice caused significant financial harm to buyers who had relied on their purchase for housing or investment.

State-by-State Buyer Protections

• New South Wales: Under the Conveyancing Act 1919 (amended 2015), a vendor cannot rescind using a sunset clause without the purchaser's written consent or an order from the Supreme Court. The court considers whether the vendor acted reasonably.
• Victoria: Under the Sale of Land Act 1962 (amended 2015), the vendor requires either the purchaser's consent or a Supreme Court order to rescind via a sunset clause. Penalties apply for non-compliance.
• Queensland: No equivalent legislative reform as of 2026. Buyers should negotiate protective sunset clause terms directly in the contract.
• Other states: Sunset clause protections vary. In WA, SA, and Tasmania, the general contract law applies and specific legislative protections may be limited. Legal advice is essential.

Negotiation Tips for Buyers

• Push for a shorter sunset period: A shorter timeframe limits your exposure and puts pressure on the developer to complete on time.
• Ensure only the buyer can rescind: Where state law allows, negotiate that only the buyer (not the developer) has the right to rescind under the sunset clause.
• Include milestone obligations: Request contractual milestones (e.g., construction commencement within 12 months) with rescission rights if missed.
• Get legal advice before signing: An experienced property solicitor can identify unfavourable sunset clause terms and negotiate amendments before you exchange.

Planning to buy off the plan? Read our complete guide on how to buy off the plan in Australia for everything you need to know before signing.