Buying Off-The-Plan? Why You Need to Understand the Sunset Clause
If you have been looking for property in recent times and have been unable to locate anything that catches your eye, then you may have decided to take a different approach. Instead, you may consider purchasing a property that is yet to be built, mostly because you love the location and can imagine the potential. Yet you do have to take extra precautions whenever you buy such a property and understand the time limits involved when it comes to completion. What do you need to be aware of?
Understanding the Sunset Clause
This type of agreement is known as "off-the-plan." A developer will market properties based on plans and projections rather than the finished item, and this can help raise money for construction purposes at the outset. The agreement will detail how long it may take to complete the development and to register with the local authority. This is the amount of time that you will have to wait until you can take possession and is known as the "sunset period." Of course, this puts the developer under pressure to make sure that they do complete within the time allowed. If not, you have the liberty to terminate the contract should you wish.
While many things can get in the way of progress, some developers may have misused the relevant clause to try and make more money from the project. They may have intentionally delayed some of the building work to overrun the sunset period and, therefore, invoke their ability to cancel the contract. Of course, this would be unfair to anyone who had been waiting patiently and had lodged a deposit at the outset. On the other hand, the developer might be able to resell that property at a higher price instead.
Some states have addressed this distasteful practice head-on by introducing new legislation. For example, in Victoria, the developer must now give the buyer at least 28 days notice before rescinding the contract—and must also explain why. They won't be obliged to agree to this termination and will have to give written consent if they do. If they hold their ground, the developer will have to take the case to the Supreme Court, which may agree in certain circumstances but may insist that the buyer is paid additional compensation as well.
Getting Expert Help
To ensure you are as protected as possible if you want to buy off-the-plan, consider working with property conveyancing services. They'll help you understand the specific details of your sunset clause.