Victorian off the plan sunset clause legislation becomes law

The Victorian Government has passed new laws that will remove the ability of developers to use sunset clauses to intentionally delay building projects and exploit buyers.

Under the Sale of Land Amendment Bill 2019 (the Bill), developers will only be able to exercise a sunset clause with written consent from the buyer, or permission of the Supreme Court of Victoria. 

The new laws on sunset clauses apply from 23 August 2018 to ensure any existing and future off-the-plan contracts are protected.

Sunset clause provisions are commonly found in off-the-plan contracts to allow developers to terminate the contract where the plan of subdivision has not been registered by a specified date.

The new laws protect buyers, who have raised concerns about developers deliberately postponing the completion of construction work in order to terminate signed contracts under the sunset clause, and then sell the property at a higher price.

The Bill will also:  

  • strengthen the existing requirement for vendors or real estate agents to disclose material facts about a property, and enable guidelines to detail what a material fact is likely to be (for example, a property’s past history as a clandestine drug laboratory or the site of a homicide)
  • prohibit public auctions of land before 1pm on Anzac Day, bringing the industry into line with the standard restricted business hours for the day
  • introduce greater protections for people who purchase options to buy land as part of a land banking scheme, including requiring money paid for options to be held in a trust
  • prohibit certain ‘terms contracts’ and rent-to-buy arrangements, with significant fines and potential jail time for vendors and third-party intermediaries to act as a strong deterrent.

The changes implement key outcomes of the Consumer Property Law Review’s examination of the Sale of Land Act 1962.

While the new laws on sunset clauses will apply from 23 August 2018, all other reforms in the Bill will be implemented by no later than 1 March 2020. We will continue to provide information as the changes come into effect. 

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