Navigating Sunset Clauses in Queensland

Property Law Gold Coast

In recent years, Queensland has witnessed a surge in housing prices, driven not only by economic factors but also by the impact of COVID-19. The pandemic has sparked significant interest in off-the-plan developments, particularly from wealthy southerners and Brisbane professionals looking to migrate beachside to the beautiful Gold Coast.

While the allure of securing a brand-new property off the plan is strong, it comes with inherent risks that both buyers and developers in Queensland should be aware of.

The current building landscape in Queensland has experienced an unprecedented increase in construction costs over the past year, potentially leading to developments coming to a standstill unless purchasers agree to contract variations.

In response to these potential risks, the Queensland Government has implemented measures to safeguard both buyers and developers from unscrupulous builders exploiting Sunset Clauses.

Understanding Sunset Clauses:

Sunset Clauses, commonly included in contracts for off-the-plan developments, specify a timeframe for completion. While these timeframes are generally lengthy, allowing ample time for development, they permit either party to rescind the contract if completion does not occur within the stipulated period. This clause is designed to protect both purchasers and developers from unforeseen delays and provide an exit strategy.

Risks Associated with Sunset Clauses:

With soaring property prices in Queensland, there’s an incentive for developers to intentionally delay projects to take advantage of the Sunset Clause. By rescinding the contract, developers can relist the property at a higher market price.

The Supreme Court case, Silver Star Fashions Pty Ltd v Dal Broi [2018] NSWSC 1445, exemplifies this issue. The developers attempted to scare purchasers into rescinding contracts, aiming to gain a substantial market price increase. The Court dismissed the attempt, emphasising unjust and inequitable actions.

Protection Under Legislation:

Queensland legislation limits a developer’s ability to rescind a contract for residential developments. If the Sunset date passes without completion, the developer must provide notice, an explanation for the delay, and proposed reasons for rescission to the purchaser, who then has 28 days to consent.

 

If an agreement cannot be reached, the onus is on the developer to prove to the Court that rescinding the contract is just and equitable under the circumstances.

Balancing Protections:

The legislation aims to strike a balance, not only safeguarding buyers but also protecting developers’ rights. It seeks to prevent unjust actions while allowing developers reasonable grounds to rescind contracts.

Why Choose HTW Legal – Property Law Gold Coast:

HTW Legal, with a wealth of experience in navigating the intricacies of Property Law Gold Coast, HTW Legal stands as the top choice for property law in the region for both buyers and developers. Whether you are a buyer or a developer, our team ensures fair and equitable resolutions tailored to your specific needs. Reach out to HTW Legal for unparalleled expertise in property law on the Gold Coast.

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