Guide

Off-the-plan: sunset clauses and disclosure

You sign now and take delivery years later. Between those two dates the building changes, your circumstances change and the market changes. This is what the law gives you to deal with that, and how long you have to use it.

General information, not legal advice. This page sets out how the law generally applies. It does not take account of your circumstances, and you should get advice about your own situation before acting on it. The official sources this page is written from are listed on it; where they differ from anything here, they are the authority.

In short

A vendor must attach an approved disclosure statement, a draft plan prepared by a registered surveyor and the other prescribed documents before you sign an off-the-plan contract. If they are missing, you may rescind within a period set by the legislation.

A developer generally cannot rescind under a sunset clause without your consent or an order of the Supreme Court of New South Wales. Where something disclosed becomes inaccurate in a material particular, you must be notified, and you may then rescind or claim compensation within a short period.

What an off-the-plan contract is

A property can be advertised and sold before the building is constructed or before the land is subdivided. That is an off-the-plan contract: an agreement for the sale and purchase of a lot that does not yet exist as a separate parcel.

It can be a proposed lot in a strata or community scheme, or a lot in a conventional subdivision of land. Either way the same problem arises. The buyer cannot inspect the thing being bought, cannot walk the boundary and cannot judge the finish. Everything has to be conveyed on paper, and the paper is prepared by the developer.

That imbalance is why the Conveyancing Act 1919 (NSW) and the Conveyancing (Sale of Land) Regulation 2022 (NSW) impose a disclosure regime on off-the-plan sales that goes well beyond an ordinary purchase, and why the protections carry deadlines. The rights are real. They also expire.

The disclosure statement and the draft plan

Before you sign, the vendor must attach a disclosure statement in the form approved by the NSW Registrar General. It sets out the key information about the lot you are buying, including the sunset date and other conditional events.

With it must come a draft plan prepared by a registered surveyor. The draft plan has to show the proposed lot, with enough information to identify where it sits, together with matters such as easements and covenants. For a proposed strata lot that extends to floor plans and location plans.

Other prescribed documents come with the package. For a scheme that typically includes the proposed by-laws, the management statement and a schedule of finishes. These are the documents that tell you what you will actually own and what rules you will live under, and they are worth reading closely rather than filing.

If the disclosure statement, the draft plan or the other prescribed documents were not attached before you signed, you may be entitled to rescind the contract within a period set by the legislation, running from exchange. It is short. If you think something is missing, raise it the same day.

The disclosure statement, in the approved form
A draft plan prepared by a registered surveyor, showing the proposed lot and its location
Easements, covenants and restrictions proposed to affect the lot
For a strata lot, the proposed floor plan and location plan
The proposed by-laws and the management statement for the scheme
The schedule of finishes
Any building management, caretaking or similar agreement the developer has entered into

Sunset clauses, and what changed about them

A sunset clause allows a contract to be brought to an end if a specified event has not happened by a specified date. In an off-the-plan contract that event is usually registration of the plan, or the issue of an occupation certificate.

The clause exists for a sensible reason. Development is uncertain, and neither party should be tied indefinitely to a project that has not proceeded. The problem was what some developers did with it in a rising market: allow the sunset date to pass, rescind, and resell the same apartment at a higher price to somebody else.

The law now restricts that. A vendor generally cannot rescind under a sunset clause without either the purchaser’s consent or an order of the Supreme Court of New South Wales. The purchaser’s position is different, and a purchaser may be able to terminate under the clause without going to court.

So read the sunset date, and read what the clause says has to happen by it. It is the date your money and your plans are tied to, and it is frequently further away than the marketing suggests.

If a developer asks you to consent to rescission under a sunset clause, or serves a notice about one, get advice before you reply. Consent is one of the two routes by which a vendor can end the contract, and it is the one entirely within your control.

When what was disclosed turns out to be wrong

Plans change during construction. The regime recognises that and requires the vendor to tell you when a change makes something disclosed inaccurate in a material particular — broadly, a change that will adversely affect the use or enjoyment of the lot you are buying.

When you receive that notice, two doors open. You may be able to rescind the contract, if you would not have entered into it had you known. Or you may stay in the contract and claim compensation for the change.

Both doors close quickly. The right to rescind or to claim compensation has to be exercised within a period that runs from the notice, set by the legislation. A notice from a developer is therefore not correspondence to read at the weekend. It is a clock starting.

The compensation route is capped by the legislation, and the cap is expressed as a proportion of the purchase price. Which of the two options is better depends on the change, on what the lot is now worth to you and on what you would do instead. That is a conversation to have in the first days after the notice, not the last.

Send any notice from the developer to your lawyer on the day it arrives, with the envelope or the email header. When the period started is as important as what the notice says.

Your deposit, and what happens if the developer fails

A deposit or instalment paid under an off-the-plan contract must be held by the stakeholder in a trust or controlled money account for the duration of the contract, and cannot be released to the vendor before completion.

That is a meaningful protection and it is worth understanding precisely. It protects the money you have paid. It does not protect you against a project that never finishes, against years of your plans being on hold, or against a market that has moved while you waited.

So the developer matters. So does the project. A contract with excellent legal protections attached to a development that does not proceed is still a poor outcome, and no clause can fix that.

The long gap, and the risk nobody drafts away

The largest practical risk in an off-the-plan purchase is time. Between signing and completion your income can change, your relationship can change, interest rates can change and lending standards can change.

A loan approval given when you signed does not bind a lender years later. At completion the lender will value the finished property, and if the valuation is below the price you agreed, you are asked to make up the difference in cash. Failing to complete generally puts your deposit at risk and can expose you to further claims.

None of that is a reason not to buy off the plan. It is a reason to sign knowing it, with a buffer, and with a clear-eyed view of the completion date rather than the optimistic one. Ask what happens in each of those scenarios before you sign, not after the notice arrives.

Our page on off-the-plan purchases sets out the work involved, and our page on strata purchases covers the scheme you will be joining when the building is finished.

Cooling off, which is a separate right again

A cooling-off period applies to off-the-plan residential contracts, and it is longer than the one for a completed home. It can still be waived by a certificate under section 66W of the Conveyancing Act 1919 (NSW), and using it forfeits a proportion of the price.

It is easy to confuse the three rights, so it is worth separating them. Cooling off is a short general right to withdraw shortly after exchange. Rescission for missing disclosure documents is a right that arises because the vendor did not attach what the law requires. Rescission or compensation for a material particular arises later, when something disclosed changes.

Each runs on its own period. Our guide to cooling off, and when there is none deals with the first.

What usually happens

Get the whole contract, with every annexure

The disclosure statement, the draft plan, the by-laws, the management statement and the schedule of finishes. An off-the-plan contract sent without its schedules cannot be reviewed.

Check what is attached against what must be

If a required document was not attached before you signed, there may be a right to rescind, running from exchange and expiring quickly.

Read the dates, especially the sunset date

What has to happen by each date, and what each party may do if it does not. The sunset date is the one your deposit and your plans are tied to.

Plan for the gap

Finance that can survive a long delay, a buffer against a lower valuation at completion, and a clear answer to what you would do if the project were late.

Act on any notice the day it arrives

A notice about a material particular starts a short period in which you can rescind or claim compensation. Delay is the usual way that right is lost.

Common questions

What is a material particular?

Broadly, a change that makes something in the disclosure statement inaccurate and that will adversely affect the use or enjoyment of the lot you are buying. The vendor must notify you of one. You may then be able to rescind, if you would not have entered the contract knowing of it, or to remain in the contract and claim compensation. Both are exercised within a period running from the notice.

Can the developer cancel my contract using the sunset clause?

Generally not on its own. A vendor needs either your consent or an order of the Supreme Court of New South Wales to rescind under a sunset clause. If you are asked to consent, or you receive a notice about one, get advice before you respond.

Can I cancel using the sunset clause?

A purchaser’s position under a sunset clause is different from a vendor’s, and a purchaser may be able to terminate without a court order. Whether you can, and whether you should, depends on the wording of your clause and on what you want to happen next. Send us the contract.

How much compensation can I claim for a change?

The legislation caps compensation as a proportion of the purchase price and sets the period for claiming it. Whether compensation or rescission is the better course depends on the change and on your circumstances, and it is worth working out quickly because the period is short.

Is my deposit safe?

A deposit or instalment under an off-the-plan contract must be held by the stakeholder in a trust or controlled money account and cannot be released to the vendor before completion. That protects the money itself. It does not protect you from the delay or from a project that does not proceed.

What if the finished apartment is smaller than the plan?

Look first at what the contract permits by way of variation, then at whether the change is a material particular that had to be notified. Off-the-plan contracts usually reserve some right to vary, and the width of that clause is one of the things worth negotiating before you sign.

What if my finance falls through before completion?

You are still bound to complete. A lender’s approval at signing does not bind it years later, and the valuation at completion may be below the price you agreed. Failing to complete generally puts the deposit at risk and can expose you to further claims. Plan for this before you sign.

What about defects when the building is finished?

Inspect before settlement and raise what you find in writing. Beyond the contract, residential building work in New South Wales carries statutory protections, and a new strata scheme has its own arrangements for defects. Which apply depends on the building and the work, so bring us the documents rather than relying on a general answer.

Has a notice arrived?

A notice from a developer about a change, or about a sunset clause, starts a short period. Send it through with the contract on the day you receive it and we will tell you what your options are.