Sunset Clauses in Victorian Property Contracts: How They Work and How to Protect Yourself

Buying off-the-plan means committing to a property that does not yet physically exist. You sign a contract based on plans, pay a deposit, and wait for construction to finish. During that wait — which can stretch to three years or more — the property market, your personal finances, and the developer's intentions can all change dramatically.

The sunset clauseis the mechanism in your contract that deals with what happens if the development takes too long. It lets either party walk away from the contract if settlement has not occurred by a specified date — the “sunset date.”

In principle, sunset clauses protect youif the developer delays endlessly. In practice, developers have at times abused sunset clauses to cancel contracts so they can resell the property at a higher price. Victorian law reform in 2019 dramatically reduced that risk — but the protections are not automatic, and buyers still need to understand the clause before they sign.

What is a sunset clause?

A sunset clause is a special condition in an off-the-plan contract that gives one or both parties the right to terminate the contract if a specified milestone — most commonly registration of the plan of subdivision or settlement— has not occurred by the sunset date.

Typical sunset dates are 18–36 months from the contract date for apartments, longer for house-and-land packages or large greenfield developments.

When the sunset date passes without settlement, the contract doesn't automatically end — but either party can give written notice to terminate. Once a valid termination notice is given, the buyer gets their deposit back (with interest), and both parties are released.

Why developers include them

Sunset clauses exist partly for legitimate reasons: construction can be delayed by planning disputes, weather, contractor insolvency, or material shortages. Both sides benefit from a defined end-point rather than being tied to an indefinite commitment.

The problem is when developers deliberately delay registration so they can trigger the sunset clause, terminate the contract, and re-sell the same apartment for a much higher price in a rising market. This was widespread in Victoria and NSW in 2014–2018, when apartment values rose faster than construction timetables.

The 2019 law reform — critical for all Victorian buyers

Responding to the abuse, Victoria introduced the Sale of Land Amendment Act 2019, which dramatically changed the rules. The key changes are in Section 10A of the Sale of Land Act 1962 (Vic).

Under the reformed law, a vendor (developer) cannot unilaterally terminate an off-the-plan residential contract using a sunset clause. Instead, the vendor must either:

1. Get the buyer's written consent to terminate, or
2. Apply to the Supreme Court of Victoria for an order approving termination.

If the vendor chooses the court route, they must give the buyer at least 28 days' written noticeof their intention, setting out the reasons. The vendor pays the buyer's court costs unless the buyer acts unreasonably.

The court must be satisfied that terminating the contract is just and equitable in all the circumstances. In deciding, the court considers matters like the cause of the delay, whether it was within the vendor's control, whether the buyer has been kept informed, the effect on the buyer, and the change in property value.

What this means for you as a buyer

Before 2019, many off-the-plan buyers lost purchases to vendor termination when the market rose. Since 2019:

• A developer cannot terminate without your consent or a Supreme Court order.
• Market-driven terminations are extremely difficult to get past the court — the uplift in value is now treated as a factor against termination, not for it.
• You, as the buyer, retain the right to terminate unilaterally by written notice if the sunset date passes.

In short: if the market rises, the contract stays in place and you get the property at the original price. If the market falls, you still have an out. The reform has made off-the-plan contracts significantly more buyer-friendly.

What buyers should negotiate

1. The sunset date itself.Push for a date that gives the developer reasonable time but not unlimited time — typically the expected completion date plus 6 months.
2. What triggers it. Some clauses use registration of the plan; others use practical completion or settlement. Registration is the safer trigger for buyers.
3. Deposit and interest. Confirm your deposit is held in trust and you receive interest if the contract is terminated.
4. Extensions.Some contracts let the vendor unilaterally extend the sunset date. Reject these — require your written consent for any extension.
5. No waiver of S10A rights.Section 10A of the Sale of Land Act cannot be contracted out of, but some developers try to include “acknowledgements” that muddy the waters. Get a solicitor to review.

Sunset clause traps to watch for

• Automatic rollover extensions.A clause that extends the sunset date if the vendor gives notice — effectively making the sunset date meaningless.
• Short sunset with no delay carve-outs. A sunset 2 years out with no extension for force majeure is setting up for premature termination even on minor delays.
• Terminations tied to pre-sale targets.Some contracts let the developer terminate if they fail to sell X% of the development — essentially transferring market risk to the buyer.
• Deposit forfeiture provisions. Section 10A requires your deposit be returned on termination. Reject any clause that forfeits deposit on sunset-date termination.

What to do if your vendor invokes a sunset clause

1. Do not sign anythingconsenting to termination without legal advice. If you consent, you lose the property — even if the market has risen sharply since you signed.
2. Engage a property solicitor immediately. They will assess whether the vendor's grounds are likely to succeed in the Supreme Court and advise on your response.
3. Document market evidence. Comparable sales, valuations, and correspondence from the developer can all help the court weigh the equities.
4. Consider whether to take the property at an extended settlement date. Negotiating a new sunset may be more valuable than recovering the deposit.

Related reading

• Buying off the plan in Victoria: risks, rights, and red flags
• Special conditions in a Contract of Sale: what to add, what to watch for
• How much deposit do you need to buy property in Victoria?

A good pre-contract review will flag unusual sunset dates, rollover provisions, and any clauses that try to sidestep Section 10A. Upload your off-the-plan contract to precontractreview.com for an automated first-pass check before you pay a solicitor hundreds to review it.