Sunset clauses in off-the-plan contracts let either party walk away if the development isn’t completed by an agreed long-stop date — often three to five years after contract signing. Until 2019, vendors used sunset clauses one-sidedly: when prices rose during construction, developers would deliberately delay completion past the sunset date, rescind, and resell the apartment at the higher market rate, pocketing the uplift.
The Sale of Land Amendment Act 2019 (Vic) closed this loophole. Vendors now need either purchaser consent or Supreme Court approval before they can rescind under a sunset clause. This guide covers the post-2019 framework, what evidence courts look for, and what every off-the-plan buyer should check in their contract.
Pre-2019 vs post-2019 — the reform that mattered
| Aspect | Pre-2019 framework | Post-2019 framework |
|---|---|---|
| Vendor right to rescind on sunset | Unilateral — pure contract right | Requires purchaser consent OR court order |
| Burden of proof | Buyer to challenge | Vendor to justify rescission |
| Notice required | Standard contract notice | 28-day notice with reasons |
| Court powers | Limited | Just and equitable test |
| Buyer rescission right | Yes (if past sunset) | Yes — unchanged |
The 2019 reform — section 10A of the Sale of Land Act 1962
Section 10A applies to all residential off-the-plan contracts where the contract was entered into on or after 23 August 2019. The key provisions:
- A vendor cannot rescind under a sunset clause unless every purchaser consents in writing OR the Supreme Court orders rescission.
- The vendor must give 28 days’ written notice with prescribed information including reasons for the proposed rescission and an explanation of the purchaser’s rights.
- The Supreme Court applies a “just and equitable” test, considering vendor delay, market price changes, vendor commercial interests, and impact on the buyer.
The just-and-equitable test in practice
Supreme Court of Victoria decisions since 2019 have established factors the court weighs:
- Vendor delay. Was the delay reasonable, or did the vendor cause it? Voluntary delay weighs heavily against rescission.
- Market price changes. If prices have risen significantly, the court is suspicious of vendor motive.
- Buyer prejudice. Has the buyer paid a deposit, arranged finance, made plans? Greater prejudice favours buyer.
- Vendor commercial position. Is the vendor financially distressed? Genuine financial issues may favour rescission.
- Reasonable extension. Could the project complete if the sunset were extended?
In most decided cases, the courts have refused vendor applications for rescission, particularly where prices had risen substantially and the vendor’s motive appeared to be capturing market uplift.
What buyers should check before signing off-the-plan
- Sunset date. When does the sunset trigger? Three years from contract signing is common; longer (4–5 years) for larger developments.
- Extension mechanisms. Some contracts allow the vendor to extend the sunset unilaterally for specified events (regulatory delays, force majeure). Review carefully.
- Construction milestone clauses. Some contracts let the vendor rescind for failure to meet earlier milestones, not just the final sunset.
- Buyer rescission right.Confirm you have a clear right to rescind if the development isn’t completed by the sunset.
- Deposit protection. Confirm where your deposit is held — typically in trust under section 27 of the Sale of Land Act 1962. Trust account protection ensures recovery if the vendor becomes insolvent.
- Variation clauses.Some contracts let the vendor make “minor” variations to the apartment before completion. Section 9AC of the Sale of Land Act limits this, but contract drafting still matters.
If the vendor sends a rescission notice
- Don’t consent without legal advice. Once you consent in writing, the rescission is final.
- Read the prescribed information. The notice must include specific information about your rights. Missing prescribed information may invalidate the notice.
- Investigate market prices. If prices have risen since signing, the vendor faces a higher hurdle in court.
- Engage a solicitor experienced in off-the-plan disputes. Cost: typically $4,000–$15,000 for advice and Supreme Court response. Cost recovery is sometimes available.
Buyer’s own rescission rights
Buyers retain unilateral rescission rights:
- When the sunset date has passed and the vendor hasn’t completed
- When the vendor has made material variations beyond what section 9AC permits
- When the Section 32 is materially deficient (covered in our Section 32K rescission guide)
Ready to check your contract? Upload your Section 32 or Contract of Sale at precontractreview.com for a pre-contract check — typically in just a few minutes.