On 14 November 2023, the Queensland Government passed the Body Corporate and Community Management and Other Legislation Amendment Bill 2023, amending the Land Sales Act 1984 (Qld) to refine the operation of sunset clauses in off-the-plan land sale contracts. The amendments bring the comparable Queensland legislation in line with existing New South Wales legislation and importantly, will operate and apply retrospectively to existing unsettled contracts in Queensland.
Off-the-plan land sale contracts often include a clause that provides for the contract to be terminated if a relevant event does not happen by the sunset date (these are known as 'sunset clauses').
Previously, if a contract included a sunset clause, property developers could unilaterally terminate a sales contract. The new laws limit when developers can terminate pursuant to these clauses.
Under the new amendments, a sunset clause can only be exercised by a seller to terminate an off-the-plan contract in the following circumstances:
- with the written consent of the buyer
- pursuant to an order of the Supreme Court
- in another situation prescribed by regulations.
Termination with consent
To terminate with the buyer's consent, a seller will be required to provide the buyer with a 'sunset clause notice' (the Notice) at least 28 days before the sunset date.
The Notice will need to include:
- a statement that:
- the seller proposes to terminate the contract on the sunset date
- the seller can only terminate the contract under the sunset clause if the buyer consents in writing
- the buyer must respond by the day before the sunset date.
- the seller's reasons for terminating the contract.
Buyers are required to act reasonably when opting to give or withhold their consent and should they fail to respond to the Notice, buyers will be deemed to have consented to termination on the sunset date.
The legislation does not require the seller to state in their Notice that a failure to respond will be a deemed consent. It simply requires a statement that the buyer 'must respond to the notice no later than the day immediately before the sunset date'.
Termination by order of the Supreme Court
If a seller seeks to apply to the Supreme Court for an order permitting them to terminate the contract under a sunset clause, they must satisfy the court that it is just and equitable in the circumstances. The court will consider among other things whether there is a reasonable prospect of the seller settling the contract, the effect of termination on the parties, whether the value of the land has increased and all steps the seller has taken to achieve settlement.
This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.