When buying land or a property in a community titles scheme that is not yet registered, it is important to be aware of and understand the implications of a sunset date.
In Queensland, while it is necessary to keep an eye out for sunset dates in off-the-plan contracts, there is also legislation that imposes a sunset date for the majority of off-the-plan purchases.
Land Sales Act 1984 (LSA)
For most sales of proposed lots situated in Queensland, the LSA provides that if the seller has not settled the contract for the sale of land within 18 months of the buyer entering into the contract of sale, the buyer may terminate the contract by written notice.
Body Corporate and Community Management Act 1997 (BCCMA)
Under the BCCMA, if a contract for the sale of a proposed lot in a community titles scheme contains a sunset date, then the seller must settle the contract before the earlier of:
- the sunset date or, if the buyer requests a later date for settlement and the seller agrees to the date, the later date; and
- the end of 5.5 years after the day the contract was entered into by the buyer or, if the buyer requests a later date for settlement and the seller agrees to the date, the later date.
Where the contract does not contain a sunset date, the seller must settle the contract before the later of:
- the end of 3.5 years after the day the contract was entered into by the buyer; and
- if the buyer requests a later date for settlement and the seller agrees to the date, the later date.
The buyer will be able to terminate the contract where the seller has not settled within the required period.
Contractual provisions
Generally, off-the-plan contracts will contain a sunset clause nominating a sunset date. Most sunset clauses will also provide the seller with a right of termination, and some even stipulate that if registration of the survey plan is not effected by the sunset date, then either party may terminate the contract.
Benefits and drawbacks to sunset dates
Sunset dates can favour either buyers or sellers depending on their circumstances and the condition of the property market. For example, during a property boom, sellers might find that the purchase prices originally noted in off-the-plan sales contracts are significantly lower than the market value of the property in the lead up to completion of a development. Conversely, buyers might find that over the course of waiting for a development to be completed their circumstances change or the value of property drops.
As off-the-plan contracts can span years and the provisions of each contract are different, it is important for buyers to seek appropriate legal advice and ensure they understand their rights and obligations before signing a contract.
The information in this article is general information only. If you are considering purchasing property off-the-plan, please contact the experienced team at Miller Sockhill Lawyers on 07 5444 4750 for advice.