Watching the sun set on your contract

After Covid we have all had to get used to things taking longer.

Whether it’s waiting for a new car, parts for literally any appliance, or as has been the case for so many building a new home – construction materials, it can feel like everything is on go slow.

What used to be an easy, duck-into-the-shop purchase is now an exercise in patience.

Days if you’re lucky, but months (if not years) if you’re not.

While all of these can be inconvenient, what happens when a property purchase or sale takes too long?

Is there a recourse or is it like buying a Rav4 – a case of sucking it up and waiting?

Unlike Toyota’s order books, property and property contracts aren’t really built to wait out indefinitely, so to draw a line in the sand as far as go through or don’t, a Sunset Clause can provide an “out” for either party to throw in the towel, generally without incurring penalty.

Now you might wonder why someone would want such a clause in place – after all, if you are signing a contract, doesn’t that mean you want to see the property transact?

Sunset Clauses are typically used where there is an indefinite or flexible period by which a term might be fulfilled such as the sale of another property or waiting for specific funds to come through.

This might be tied in with a transfer from a death, the finalisation of a divorce settlement or more happily, release of funds from a term deposit or other investment.

The most common use for this clause though, relates to the purchase of new builds or land, where the contract is signed prior to completion (or even commencement in some cases).

The settlement of these contracts will generally be tied into the registration date or issue of final certificate and since this is rarely calculable to the day, flexibility is needed.

On the other hand, you don’t want to wait indefinitely, particularly when some projects might see extended delays or as we have seen with some major projects locally, they never actually get off the ground.

Triggering the sunset clause in these cases puts a pin in it, refunds the deposit and lets everyone move on.

Tom Quaid is the REIQ Zone Chair for Cairns