What is a Sunset Clause Buying Off the Plan?

Buying off the plan has become a popular avenue for Australians looking to secure a property before it is even constructed. This method offers an opportunity to enter the property market and acquire a home at a lower price compared to buying an established property. However, it is crucial to be aware of the associated risks and potential pitfalls when venturing into off-the-plan purchases. Among the key considerations, the sunset clause plays a significant role.

A sunset clause is a contractual provision that sets a specific date by which the contract, in the context of off-the-plan purchases, stipulates the completion of the property. If the property fails to meet the specified completion date outlined in the sunset clause, the buyer retains the right to terminate the contract and receive a refund of their deposit.

The inclusion of a sunset clause in the contract is vital for buyers engaging in off-the-plan purchases as it provides a level of protection in case the property is not completed within the designated timeframe. However, it is important to note that the sunset clause does not guarantee timely completion but rather offers recourse to the buyer if the property remains unfinished beyond the specified date.

In Australia, the standard timeframe for a sunset clause is typically set at 12 months from the contract's date. This means that the property must be completed within 12 months from the contract's signing, giving the buyer the right to terminate the contract and receive a deposit refund if the completion deadline is not met.

It is essential to understand that the sunset clause does not assure the property's on-time completion but serves as a contractual provision outlining the deadline. In the event that the property remains unfinished by the specified date, the buyer can exercise their right to terminate the contract and receive their deposit refund.

When embarking on an off-the-plan purchase, it is vital to fully comprehend the associated risks and potential pitfalls, with the sunset clause being a crucial component of the contract. At Ello Lending, we understand the complexities involved in off-the-plan purchases and the significance of understanding the intricacies of the sunset clause. Our team of experienced mortgage brokers is dedicated to guiding you through the process, ensuring you have a comprehensive understanding of the risks involved. We offer tailored loan solutions to meet your specific needs and provide the advice and support necessary to make informed decisions.

Should you have any inquiries regarding off-the-plan purchases or the sunset clause, please do not hesitate to contact us. Our team of knowledgeable mortgage brokers is readily available to address your concerns and assist you in securing a home loan that suits your requirements.