NSW Changes Sunset Clause Laws

Market Insights
8 years ago
2 minutes

The Urban Development Institute of Australia NSW last week welcomed the sunset clause legislation passing through Parliament yesterday, saying the new rules will prevent unscrupulous operators from tarnishing the reputation of the industry.

UDIA NSW Chief Executive Stephen Albin said the new laws will deter rouge developers from rescinding off-the-plan contracts for financial gain, and ultimately protect buyers and reputable industry operators.

“It’s critical for the future of the industry that rogue operators – who are very much on the fringe - are stamped out to maintain confidence and integrity in the field,” he said.

Mr Albin said the Institute is pleased Parliament has been quick in its response to closing the loophole that allows this unethical activity to happen.  

“It’s positive to see this legislation pass with bipartisan support, and it’s also great to see the government working with all stakeholders to swiftly address this issue.” 

The change comes in light over serious public scrutiny over a certain group of developers not offering the appropriate securities when it comes to expected settlement dates. 

The benefits of a sunset cause is that it:

• allows the developer to achieve certain level of pre-sales

• it gives you a date to expect when you can occupy and settle in your new property. If your project isn’t completed on time, you are allowed to walk away from the contract as well as receive your deposit back

What are the obligations?

• Fully understanding the obligations set out in a sunset clause is pivotal to grasping its concept

• a contract with a sunset clause means the contract can be terminated before the dominated settlement date at the expiry of the clause - ie, you can walk away if the promised date hasn't been kept

• after the contract expires, developers may attempt to resell the same property to you at an inflated price

• if a sunset clause date is extended to after the initial expected complete date, but the development is completed within that extend period, you as a buyer must settle at the agreed purchase price