In November 2023 legislative reforms were introduced in Queensland strengthening consumer protections in off-the-plan land purchases. This was in response to concerns in the marketplace that property developers were using sunset clauses to terminate off-the-plan contracts in order to re-list and sell the proposed lot for a higher price. A sunset clause is a contract clause that allows a party to terminate if settlement does not occur by a certain date. Whilst buyers would receive their deposit back upon termination of the contract, changing market conditions and rising house prices would make it difficult to afford another similar property.

Key Changes to the Law

Under the new provisions in the Land Sales Act 1984 (Qld) (‘the Act’), a seller may only terminate the contract under a sunset clause under the following conditions:

Option 1 – Consent

The Seller must give the Buyer a sunset clause notice and receive the Buyer’s consent in writing.

The notice must be provided at least 28 days before the sunset date and state the following:

1. that the seller proposes to terminate the contract on the sunset date;
2. that the seller may only terminate the contract under the sunset clause if the buyer consents in writing to the proposed termination;
3. the reasons the seller proposes to terminate the contract; and
4. that they buyer must respond to the notice no later than the day immediately before the sunset date.

Importantly, the Buyer’s failure to respond to the notice is not taken as evidence that the Buyer consents to the termination.

Option 2 – Supreme Court Order

Alternatively, the Seller must obtain an Order from the Supreme Court permitting the seller to terminate the contract.

Option 3 – Alternative prescribed by regulation

A regulation may prescribe another way the Seller may terminate an off-the-plan contract under the sunset clause however as at the date of this article, there are no alternatives prescribed by the regulations.

What contracts do these reforms apply to?

These reforms apply to all off-the-plan contracts not settled by 22 November 2023, not just contracts signed after that date. They do not apply only to off-the-plan land contracts under community title schemes such as apartments and townhouses. However, the Queensland Government has indicated it may consider expanding the reforms following further consultation and review.

Contracting out of these reforms are prohibited and any clauses to that effect will be void under section 22 of the Act.

Implications for Buyers and Sellers

These reforms represent a major step toward enhancing buyer confidence and fairness in off-the-plan transactions. For developers and sellers, the changes mean that reliance on and use of sunset clauses requires careful legal compliance.

Buying property off-the-plan can offer benefits, but also carries risks. These new laws are a timely reminder of the importance of obtaining legal advice before entering or exiting any contract.

At Rose Litigation Lawyers, we regularly act for both property developers and buyers in resolving contract disputes. Whether you are a buyer or seller in an off-the-plan contract, we can help you understand your rights and obligations and navigate a commercial outcome tailored to your circumstances.

The content of this publication is intended to provide a summary and commentary only. It is not intended to be comprehensive, nor does it constitute legal advice and has been prepared based on applicable legislation and case authority at the date of publication. You should seek legal advice on specific circumstances before taking any action.