ByLawyers News and Updates

Sunset clause – QLD

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Amendments to the Land Sales Act 1984 affecting sunset clauses in off the plan contracts commenced on 22 November 2023. The new provisions provide that there is no automatic termination under a sunset clause.

The changes under Part 4 of the Body Corporate and Community Management and Other Legislation Amendment Act 2023 are intended to prevent developers using delaying tactics to enable them to terminate a contract under a sunset clause and sell the property for a higher price.

A new Division 4A of the Land Sales Act 1984 applies to all off the plan contracts that include a sunset clause entered into on or after 22 November 2023, and retrospectively to existing unsettled contracts.

When a seller can terminate under a sunset clause

Section 19D now provides that a seller can only terminate a contract for a relevant event not occurring by the sunset date if:

  • the seller has provided all buyers with a sunset clause notice and has their written consent to the proposed termination; or
  • the seller obtains an order permitting the termination from the Supreme Court; or
  • a regulation otherwise permits the seller to terminate the contract.

A relevant event is:

    • registration of the plan of subdivision for the proposed lot;
    • creation of a separate indefeasible title for the proposed lot;
    • settlement of the contract;
    • another event prescribed by regulation as a relevant event.

The sunset date means:

    • for a relevant event other than settlement, the day it must happen under the contract, including an extension provided for in the contract; or
    • the settlement day, including an extension provided for in the contract.

Section 19C provides that a sunset clause cannot automatically terminate an off the plan contract. If a sunset clause purports to automatically terminate the contract, it is taken to mean the contract can be terminated under the new provisions, on or after the sunset date.

Notice of termination under a sunset clause

A seller proposing to terminate a contract under s 19D must serve notice in writing on each buyer at least 28 days before the sunset date containing certain information including their reasons.

The buyer must consider the information in the notice and act reasonably in the circumstances. They must respond to the notice by the day before the sunset date. Failure to respond does not represent consent to the termination.

Supreme Court order for termination under a sunset clause

The Supreme Court can make an order permitting the seller to terminate the contract under a sunset clause if the seller satisfies the court it is just and equitable in the circumstances. Section 19F(3) sets out the factors the court can consider in making this determination.

The seller will also be liable to pay the buyer’s costs of the proceedings unless the seller satisfies the court that the buyer unreasonably withheld consent to the termination.

Publication updates

The By Lawyers Sale and Purchase of Real Property guides have been updated accordingly. Precedents for a termination notice and consent to termination precedent have been added to the respective matter plans, with letters enclosing them.

Conveyancing Victoria – Seven reasons to use the By Lawyers Contract of Sale of Land

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The By Lawyers Contract of Sale of Land for Victoria is gaining more fans among Victorian lawyers and conveyancers all the time, as it simplifies the conveyancing process.

For those still wondering what all the fuss is about, you can read below Seven reasons to use the By Lawyers contract – or you can listen to this lively and informative podcast:

 

Seven reason to use the By Lawyers Contract of Sale of Land:

  1. The contract and the vendor’s statement are combined into ONE document, with the vendor’s statement, logically, coming FIRST. The vendor’s statement is formatted to deal with the obligatory disclosures first, then to group the optional fields in a way that makes removal of those fields simple if they are not required. Part 2 general conditions in PDF form removes the need for ‘standard’ special conditions. Any genuinely special conditions can be added.
  2. Clear new approach – all pertinent details are set out in Part 1 to enable anyone to quickly understand the deal by referring to this Part.
  3. Particulars of sale include a “sunset date” for off the plan approvals. No more searching through mountains of special conditions to work out this crucial date.
  4. Non-derogation warranty. The general conditions can be amended by any special conditions BUT not so as to reduce the rights created by the general conditions. No more contracts that say one thing on page 1 and reverse that on page 15! This contract is fair to both parties.
  5. General Condition 12 – deposit release – establishes a clear protocol for early release, by requiring timely objection to title. Title objections actually have very limited relevance to the Torrens system, as title is part of the disclosure in the contract. General Condition 12 allows 28 days to object to title. This offers protection to purchasers, while allowing the vendor to have use of the deposit. Again, this process is fair to both parties.
  6. General Condition 14 – loan condition – extends the time for approval to 21 days and allows for extension, subject to vendor’s ability to end the extension by notice.
  7. General Condition 25 – losses – removes any disputes relating to default losses from the settlement process and allows the parties to resolve these issues after settlement. Unless there is a legitimate objection to title, the matter is settle and disputes relating to quality and inclusions etc, follow after settlement. This removes unnecessary settlement delays.

The By Lawyers Contract of sale of Land is available to LEAP users and By Lawyers subscribers via the Conveyancing & Property – Sale matter plans, or for purchase on the By Lawyers website.

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