Queensland Sunset Dates – The Pursuit of Fairness

Long has buying a house, unit or land ‘off the plan’ been commonplace in Queensland. The pressure of increasing demand and a supply that is struggling to keep pace necessitate forms of home acquisition that are not necessarily commonplace in years gone by. However, with no end in sight to the desire to live in the Sunshine State, and enjoy the lifestyle that it has to offer, failing some miraculous materialisation of new homes, off the plan purchases are more than likely here to stay, and indeed, become more and more the norm.

What is it to Purchase ‘Off the Plan’?

To buy a home ‘off the plan’ is to enter into a contract to purchase a lot prior to it being registered with the Queensland Department of Resources as an individual property. In other words, the contract will describe the lot as a ‘proposed lot’ contained within a larger parcel of land, usually shown on a proposed plan of subdivision of the larger parcel.

There are certainly advantages of purchasing ‘off the plan’, it is certainly normal that the purchase price is likely less than if the lot was its own standalone lot as at the contract date. It is, perhaps, accurate to say that a more interdependent relationship is created between the seller and the buyer, as the seller likely needs to show their financiers the contracts for the subdivided lots in order for their funding to be approved and received. Thus, through this relationship both parties are placed in an advantageous position though the buyer’s willingness to be bound to purchase prior to registration, and the seller’s willingness to account for the buyer’s investment into their project, usually in its infancy.

The drawbacks are likely obvious. The primary to be addressed is the uncertainty as to timing. As a lot of work needs to be done to register a subdivision into the individual lots, no certain date may be provided for when the buyer will become the owner of the lot. From a legal perspective, this is expressed that settlement will occur a set number of days after the seller has completed certain key milestones up to the creation of the proposed lot as a standalone parcel whose ownership is capable of being transferred to the buyer.

What is a Sunset Date?

A sunset date is a date by which all of the key milestones must be achieved, and in practice, is the determining factor to the last day that settlement may occur.

The State of Queensland has statutory limits on the maximum time after the contract date that a sunset date may be:

• If you are purchasing within a community titles scheme (being units, apartments, townhouses etc.), then it is five and a half years after the contract date; or
•  If you are purchasing land, then it is eighteen months after the contract date.

Usually, contracts contain the provision that if settlement does not occur by the above, or shorter dates, then either party may rescind the contract, with any deposit to be returned to the buyer.

An Opportunity for the Unscrupulous

Sadly, it is human nature that some may seek to take unfair advantage of the operation of the law for mercenary or other reasons. This is certainly not; however, to say that all or even anywhere near the majority of sellers of off the plan lots would do so.

In recent times, the ability for a seller to terminate contracts after the sunset date has been put under the magnifying glass of public opinion. It is a fact that housing prices in Queensland have risen dramatically over a short period of years, and a lot that was previously marketable at one price may now be saleable for hundreds of thousands more.

The accusation that we have heard countless times is that a seller may be unjustly delaying the creation of the individual lots in order to exercise their sunset date rights, and resell at a far greater profit.

Once more, this is not all sellers, but a very small minority.

Protections to Buyers

Hearing the attention being given to this legal space, on 22 November 2023, the Queensland Government enacted some statutory protections to buyers of off the plan land (but not units). From its enaction, and applying to any off the plan land contract entered into but not settled prior to 22 November 2023, a seller may not terminate the contract unless they have obtained either:

• The consent of the buyer; or
•  An order from the Court allowing for the termination, which would necessitate the seller proving that it has done all things reasonably possible and that it would be just and equitable to terminate the contract.

To reiterate, this only applies to off the plan land, not units. When such protections are to be allowed to unit buyers is not within our knowledge.

Moving Forward

Sunset dates and clauses allowing for their operation are one of, if not the, most nuanced aspects of off the plan sales contracts. Care should be taken both as a buyer and as a seller in their drafting and understanding prior to entering into a contract.

Our offices have extensive experience in acting for both sellers and buyers of off the plan lots, and if you are considering being either we would be pleased to offer our assistance and ensure that you fully understand the terms of these contracts and are an educated buyer or seller.

Disclaimer: This article is for general understanding and should not be used as a substitute for professional legal advice. Any reliance on the information is strictly at the user's risk, and there is no intention to create a lawyer-client relationship from this general communication.