A sunset date in a property contract is the latest date by which a party must fulfil a condition in the contract. Failure to do so will often lead to a right to terminate the contract.

A seller and a buyer are free to negotiate sunset dates but there is legislation in place that governs sunset dates in property contracts.

• Land Sales Act 1984 requires a seller to settle the sale of an off the plan contract for flat land (non-strata title) within 18 months of the contract date.

• Body Corporate and Community Management Act 1997 requires a seller to settle the sale of an off the plan contract for strata title property no later than 5 ½ years from the contract date.

From the seller/developer’s perspective, it will want a long sunset date to allow sufficient time to obtain development approvals, funding and to carry out the necessary construction works.

Buyers need to be wary of entering into long term contracts as a buyer’s circumstances will be very different and can change over time. Property values can go up and can come down over the course of a long term contract. If values come down then that will affect the buyer’s ability to obtain a loan on the property.

A buyer’s personal circumstances may change. They may get married, divorced, move interstate or move overseas or become unemployed. Any of these situations may lead to a buyer wishing that he or she was not tied into a long term contract.

So buyers need to think long and hard about the ramifications of entering into long term contracts and to seek legal advice about sunset dates and the contract terms generally before entering into the contract.

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