The Queensland State Government has brought in changes to strengthen protection for buyers involved in “off-the-plan” property contracts.
Off-the-plan land contracts often include a clause that allows for the contract to be terminated if a certain event does not happen by the “sunset date”, known generally in the industry as a sunset clause.
Previously, a property developer could unilaterally decide to terminate a sales contract, but the new laws now limit when developers can end a contract.
A sunset clause can now only be exercised by a seller in these circumstances:
- With the written consent of the buyer
- By order of the Supreme Court
- In another situation prescribed by the regulations
According to the Queensland Attorney-General’s department, the building industry has been facing supply chain issues, labour shortages, and increased costs for supplies since the COVID-19 pandemic.
“Following these challenging market conditions, there have been several reports of developers invoking a sunset clause to terminate an ‘off the plan’ contract, allegedly in order to re-list and sell the proposed lot for a much higher price,” the department said in a statement.
“That’s why changes will be made to legislation to make sure property developers can only invoke a ‘sunset clause’ to terminate ‘off the plan’ contracts for land in specific situations.
“While property development is a vital part of the Queensland economy, we also need to make sure Queensland buyers are protected when they purchase land off-the-plan.
“We have listened to home buyers and property developers to ensure these changes reflect both party’s needs.”
The reforms also mean sellers can't get early access to any deposits paid under off-the-plan contracts.
Deposits paid under off-the-plan contracts can only be released from a trust account to sellers at the time of settlement or if the contract otherwise finalises and the seller is entitled to the deposit.
It’s important for both buyers and sellers to be aware of these changes to legislation.
The experts at GLG Legal can help you with every aspect of conveyancing and property law. Contact our office today on: (07) 3161 9555 or email: info@glglegal.com.au to make an appointment.