Before drafting or relying on a sunset clause, you’ll need professional advice from a property lawyer admitted in the state where the land sits. Sunset clause law is now state-specific, it has been rewritten more than once in a decade in some jurisdictions, and the consequences of getting it wrong fall on you personally as the vendor: a purported rescission that does not comply is generally treated as your breach of contract, which can expose you to damages measured on the purchaser’s lost bargain rather than a refund of the deposit. This guide is written to make that conversation with your lawyer shorter and sharper. It does not replace it, and the questions worth putting to them are set out near the end. Section numbers and commencement dates below were current at the date of writing, and with the law under active review in more than one jurisdiction, the linked primary source is the place to confirm anything you are about to rely on.
What is a sunset clause in an off-the-plan contract?
A sunset clause is the term in an off-the-plan contract that lets the contract be brought to an end if a defined event has not happened by a defined date. In New South Wales the legislation calls that event the “sunset event” and defines it as “the creation of the subject lot, the issue of the occupation certificate in relation to the subject lot or another event prescribed by the regulations” (section 66ZS(1), Conveyancing Act 1919 (NSW)). Victoria frames it as registration of the plan of subdivision or issue of an occupancy permit. Queensland calls it a “relevant event” and defines it as registration of the plan of subdivision, creation of a separate indefeasible title, settlement of the contract, or another event prescribed by regulation (section 19B, Land Sales Act 1984 (Qld)).
The practical shape is the same everywhere. You sell a lot that does not exist yet. Both sides need an outer limit on how long the purchaser’s money and the vendor’s obligation stay in suspense. The sunset date is that limit.
What has changed, and what most of the material still on the web has not caught up with, is who gets to pull the trigger. Historically a sunset clause could operate automatically, or could be exercised by either party, and in a rising market that gave a vendor an obvious temptation: let the date pass, rescind, and resell the same lot at today’s price. Every jurisdiction that has legislated in this area since 2015 has legislated to close that off, and the mechanism they have all landed on is the same. The vendor can only rescind with the purchaser’s written consent, or with an order of the Supreme Court.
The purchaser’s side of the clause has generally been left alone. Where a contract gives the purchaser a right to rescind on the sunset date, that right typically survives the reforms untouched. In New South Wales this is express: section 66ZS(11)(b) preserves “any right that a purchaser may have to rescind an off the plan contract under a sunset clause”. So the clause is now, in the reformed states, close to a one-way option in the purchaser’s favour. That asymmetry is what drives both how the date gets set and how the job gets programmed.
Why does the sunset date matter to a developer’s feasibility?
The sunset date is a hard constraint on your programme that sits outside the building contract, and it is usually set at the point in the project when you know the least.
Three things tend to follow from it.
The first is delivery risk. If the sunset event does not occur by the sunset date, the purchaser can generally walk, and in the reformed states you cannot do the same without their written consent or an order of the Supreme Court. That is a one-sided exposure. In a falling market it is the purchaser who exercises, and your pre-sales evaporate at exactly the point your funder is looking at them. Pre-sales that expire on a date you chose 30 months ago are worth less than pre-sales that do not.
The second is the funding line. Where a lender has sized a facility off qualifying pre-sales, the debt cover attached to those contracts is only as durable as the contracts themselves. A cluster of sunset dates falling inside the construction period tends to be a covenant issue before it is a sales issue, and it interacts with your peak debt and funding exposure at the worst point on the curve. Modelling matters here. A delayed settlement date may look like a timing shift in the development cashflow, but it can be the loss of the revenue line altogether.
The third is the cost of being wrong. A rescission that does not comply with the statute is not a neutral event. In Victoria, a purported rescission of a residential off-the-plan contract in contravention of the Division is taken to be a breach of that contract (section 10D, Sale of Land Act 1962 (Vic)). New South Wales achieves the same result by making the notice requirement a term of the contract and voiding any inconsistent provision.
Set against that, the sunset date is one of the few programme inputs you control at contract stage. The dates that tend to survive contact with the project are built off a defensible construction programme with real allowance for approvals, registration and certification, rather than off a marketing target.
Which contracts are actually caught by the sunset clause rules?
Scope is where the errors tend to happen, and it varies far more than the headline “you need consent or a court order” suggests.
The reformed regimes generally apply to residential off-the-plan contracts. A contract for a commercial or industrial lot in a proposed subdivision is typically outside them, which means the old common law position and the contract’s own words usually govern. If you are selling both residential and non-residential lots out of the same scheme, you may be running two different legal regimes off one project.
Queensland goes further than that and carves the market in two. The Queensland reforms sit in the Land Sales Act 1984, which deals with proposed lots that are not lots in a community titles scheme. The Queensland Department of Justice states plainly that the reforms “don’t apply to lots in community titles schemes” and “don’t apply to sunset clauses in linked or single house-and-land contracts” (Review of 2023 sunset clause legislative reforms, Queensland Department of Justice). In practice that means a Queensland land subdivision is inside the regime and a Queensland apartment building generally is not. That is the opposite of what a developer arriving from a southern state would assume, and it is worth confirming with your lawyer before proceeding on either footing.
Queensland’s Act also excludes some transactions entirely. Under section 3 of the Land Sales Act 1984 (Qld), the Act does not apply where the sale is part of a “large transaction”, defined as the sale of six or more proposed lots where the seller and buyer are the same person and the sale is the subject of a single contract or of two or more contracts entered into within 24 hours, and it does not apply where the sale arises from a reconfiguration of land into not more than five lots. A small subdivision and a bulk sale to a single buyer may both sit outside the regime.
Options are worth a separate look. Queensland’s definition of “off-the-plan contract” in section 19B expressly includes “a contract that grants a person an option to purchase a proposed lot”. Where your structure runs through a put and call option rather than a straight contract, the question of whether the sunset regime bites is a live one and the answer may differ by state.
Timing of application is the other trap. New South Wales applied the current section 66ZS to all off-the-plan contracts, whether entered into before or after commencement on 1 December 2019, according to the Office of the Registrar General. Queensland’s reforms apply to contracts entered into on or after 22 November 2023 and retrospectively to contracts still on foot at that date. A contract signed years before the reforms may still be governed by them.
New South Wales: what does section 66ZS require?
In New South Wales a vendor may rescind under a sunset clause only with each purchaser’s written consent given after a 28-day notice, or with a Supreme Court order, or in circumstances the regulations permit.
The operative provision is section 66ZS of the Conveyancing Act 1919 (NSW). It is worth noting that a large amount of commentary still online cites the earlier section 66ZL, which came from the Conveyancing Amendment (Sunset Clauses) Act 2015. The current provision is section 66ZS, introduced by the Conveyancing Legislation (Amendment) Act 2018 and commencing 1 December 2019. If a source is citing 66ZL, it predates the change that widened the definition of a sunset event to include the issue of an occupation certificate.
Section 66ZS(3) states that a vendor may rescind “only if” one of three things applies: each purchaser consents in writing after being served with the notice; the vendor has obtained a Supreme Court order; or the regulations otherwise permit it.
Section 66ZS(4) makes the notice a term of the contract. The vendor “must serve each purchaser under the contract notice in writing at least 28 days before the proposed rescission that specifies why the vendor is proposing to rescind the contract and the reason for the sunset event not occurring by the sunset date”. Two separate reasons, both required. A notice that says the date has passed without explaining why the sunset event did not occur is arguably not a compliant notice.
Section 66ZS(5) disarms automatic rescission clauses. If the clause purports to rescind automatically, “it is to be read as if it instead permits the contract to be rescinded on or after the sunset date in accordance with this section”. Section 66ZS(10) voids any inconsistent contract provision, so drafting around the section does not work.
Two consequences deserve attention at feasibility stage. Under section 66ZS(8) the vendor is liable for the purchaser’s costs of the court proceedings unless the vendor satisfies the Court that the purchaser unreasonably withheld consent. And under section 66ZS(11)(a), even where the Court permits rescission, nothing limits the Court’s power to award damages against the vendor. Winning the application may not be the end of the exposure.
Victoria: how do sections 10A to 10F of the Sale of Land Act work?
Victoria’s regime mirrors the New South Wales structure and adds a drafting obligation that carries a penalty.
Section 10A of the Sale of Land Act 1962 (Vic) converts any automatic rescission clause into a right to rescind exercisable only in accordance with the Division. Section 10B then sets the gate. A vendor may rescind if the relevant plan of subdivision has not been registered by the sunset date, or an occupancy permit has not been issued by the sunset date, but before doing so “must obtain the written consent of each purchaser to the rescission after giving each purchaser, at least 28 days before the proposed rescission, written notice setting out” the reason the vendor proposes to rescind, the reason for the delay in registration or issue of the occupancy permit, and “that the purchaser is not obliged to consent to the proposed rescission”.
That last element is a Victorian addition worth noting. The notice itself has to tell the purchaser they can say no.
Section 10C voids any inconsistent provision to the extent of the inconsistency. Section 10D makes a non-compliant purported rescission a breach of contract. Section 10E is the court route, discussed below.
Section 10F is the one that catches people at drafting stage rather than at rescission stage. It requires the sunset clause itself to contain a statement that the vendor must give notice of a proposed rescission, that the purchaser may consent but is not obliged to, that the vendor may apply to the Supreme Court, and that the Court may permit rescission if satisfied it is just and equitable. This has applied to residential off-the-plan contracts since 1 March 2020. Precedent contracts drawn before that date, or drawn for another state, will not contain it.
Victoria’s regime attaches to “residential off-the-plan contracts”, so the definitional boundary between residential and other lots does real work. Where your scheme involves subdivision in Victoria, the registration of the plan of subdivision is the event the whole clause turns on, and the realistic date for it is a question for your surveyor and your lawyer rather than your sales agent.
Queensland: what changed on 22 November 2023?
Queensland restricted seller-side termination under sunset clauses for off-the-plan land contracts with effect from 22 November 2023, using the same consent-or-court-order structure as the southern states.
Division 4A of the Land Sales Act 1984 (Qld) was inserted in 2023. Section 19C states that “a sunset clause cannot automatically terminate an off-the-plan contract”, and reads any such clause as permitting termination on or after the sunset date under the Division instead.
Section 19D sets out the gate. A seller may terminate only if the seller gives a “sunset clause notice” and receives the buyer’s written consent, or the Supreme Court makes an order under section 19F, or a regulation prescribes another way. The sunset clause notice must be given “at least 28 days before the sunset date”, and must state that the seller proposes to terminate on the sunset date, that the seller may only terminate with the buyer’s written consent, the reasons for the proposed termination, and that the buyer must respond no later than the day immediately before the sunset date.
Note the timing difference from New South Wales and Victoria. Queensland runs its 28 days back from the sunset date, not from the proposed rescission. Miss that and the notice is late before the date arrives.
Section 19E imposes a reciprocal obligation on the buyer, who must consider the notice, “act reasonably in the circumstances”, and respond within the time stated. Silence, though, is not consent: section 19E(3) states that a failure to respond “is not to be taken as evidence that the buyer consents to the termination”.
For Queensland apartment projects, the relevant timing provision usually sits elsewhere. Section 217B of the Body Corporate and Community Management Act 1997 (Qld) gives a buyer a right to terminate where the seller has not settled before the end of three and a half years after the contract was entered into, in contracts that do not provide for a settlement date. Under section 14 of the Land Sales Act 1984 (Qld), the seller of a proposed lot must settle within 18 months of the buyer entering the contract, with the buyer able to terminate for a failure to comply. Those statutory outer limits sit behind whatever date the contract nominates, and they may be the binding constraint on a long-dated project.
Australian Capital Territory: what does Part 2A cover?
The ACT regime is broader than the others in one respect: it catches delay events as well as sunset dates.
Part 2A of the Civil Law (Sale of Residential Property) Act 2003 (ACT) was inserted in 2021 and runs from section 19A to section 19F. It uses the term “rescission provision” rather than “sunset clause”, and covers a provision under which the contract is rescinded if a sunset event does not occur by the sunset date or a delay event occurs.
Section 19B allows a seller to rescind under a rescission provision only where each buyer, after being given a notice under section 19C, consents in writing; or the Supreme Court has made an order under section 19D; or a circumstance prescribed by regulation applies. Section 19E prevents automatic rescission.
The consequence of the broader drafting is that ACT contracts which reserve a right to terminate on a defined delay event, rather than only on a date, are likely to be inside the regime. A clause drafted for a New South Wales project and reused in Canberra may be caught in ways the drafter did not intend.
What applies in Western Australia, South Australia, Tasmania and the Northern Territory?
No equivalent statutory restriction on vendor-side rescission appears to have commenced in Western Australia, South Australia, Tasmania or the Northern Territory as at the date of writing. The position in those jurisdictions generally rests on the contract itself, on general contract law, and on the unfair contract terms provisions of the Australian Consumer Law.
Western Australia’s regulator puts it plainly. Consumer Protection Western Australia describes sunset clauses as something “developers use to set a contract’s end date”, notes that withdrawal clauses may allow either party to withdraw where conditions are not met, and points buyers to the unfair contract terms provisions where the contract is a standard form consumer contract. It also notes that for strata title or survey strata sales, deposits must be held in trust only until the plan is registered, so a clause is needed if the purchaser wants them held to settlement.
South Australia has been consulting on change. In October 2024 Consumer and Business Services listed “limitation or regulation of the use of ‘sunset’ clauses to terminate off-the-plan contracts” among the options in its Building and Construction Industry Review, citing “concerns with builders deliberately postponing the completion of construction work in order to cancel a contract using a sunset clause and sell the property at a higher price”, and situations where “builders have indicated that they intend to use a sunset clause to terminate a contract, if additional funds are not paid by consumers” (Consumer and Business Services, South Australia). Consultation closed in January 2025. Anyone drafting a South Australian off-the-plan contract with a long sunset date would be sensible to ask their lawyer where that review has landed.
The absence of a statutory restriction is not the same as a free hand. The unfair contract terms regime under the Australian Consumer Law has applied with civil penalties since 9 November 2023, and the Australian Competition and Consumer Commission has been explicit that proposing, using or relying on an unfair term in a standard form contract is prohibited and penalised. A one-sided rescission right in a standard form residential contract is exactly the kind of term that regime was drafted for.
What does the Supreme Court “just and equitable” test actually involve?
Every reformed jurisdiction gives the vendor a court route, and every one of them puts the onus on the vendor. The Court may permit rescission only if the vendor satisfies it that doing so is just and equitable in all the circumstances.
The statutory factors overlap heavily. In New South Wales, section 66ZS(7) requires the Court to take into account the terms of the contract, whether the vendor has acted unreasonably or in bad faith, the reason for the sunset event not occurring by the sunset date, the likely date on which the sunset event will occur, whether the subject lot has increased in value, the effect of the rescission on each purchaser, any other matter the Court considers relevant, and any other prescribed matter.
Victoria’s section 10E(3) lists the same considerations, keyed to registration of the plan of subdivision or issue of the occupancy permit.
Queensland’s section 19F(3) is the most detailed of the three. Alongside the familiar factors it requires the Court to consider whether a term of the contract “is intended to avoid the operation of this division”, whether matters beyond the seller’s reasonable control affected the seller’s ability to settle or the viability of the seller’s business, whether there is a reasonable prospect of the seller settling, what actions the seller took to settle and to minimise the effect of whatever caused the delay, the effect of settling on the seller, the effect of terminating on the buyer, and the extent of the buyer’s performance of their obligations.
Those lists work as an evidentiary checklist rather than a legal abstraction. They point at a contemporaneous record: what went wrong, when you knew, what you did about it, what it did to the project, and what the lot is worth now. That record is built during the job or it is not built at all.
Two features of the regimes tend to determine whether the application is worth making at all.
The first is costs. New South Wales section 66ZS(8), Victoria section 10E(5) and Queensland section 19F(4) each make the vendor liable for the purchaser’s costs of the proceedings unless the vendor satisfies the Court that the purchaser unreasonably withheld consent. The default runs against you.
The second is that success may be partial. New South Wales section 66ZS(11)(a) preserves the Court’s power to award damages against the vendor even where an order permitting rescission is made. Victoria’s section 10E(4) allows the Court to make “any other order it considers just and equitable in all the circumstances, including an order for reasonable compensation of the purchaser”. An order permitting rescission is not necessarily an order that leaves you whole.
The reported case law is thin and, so far, unhelpful to vendors. The first case decided under the New South Wales regime is generally taken to be Jobema Developments Pty Limited v Zhu [2016] NSWSC 3. On the facts as reported, a developer had acquired a stalled project, worked out it could not complete for a further two years, offered purchasers an extension of the sunset date conditional on a higher price, and served rescission notices on those who refused. The Court declined to permit rescission. The commercial reading is straightforward: an application that follows a failed attempt to reprice the same contract is an application made against the grain of the factors the Court is required to weigh.
How the 28-day notice works, and where it goes wrong
The notice is a statutory instrument, not a courtesy letter. The required content differs across the three reformed states, as set out in the sections above, but the difference that catches anyone running projects across borders is the clock. New South Wales and Victoria both run their 28 days back from the proposed rescission. Queensland runs them back from the sunset date itself. One detail sits only in the New South Wales provision, which allows service on a person authorised under the contract as the purchaser’s representative.
Four points tend to be where things come unstuck.
Consent must come from every purchaser under the contract, and in New South Wales it must be given after service of the notice. Consent obtained earlier, or from one of two joint purchasers, does not satisfy the section.
The reason has to be a real reason. “The sunset date has passed” is a statement of the trigger, not an explanation of the delay.
Silence is not consent. Queensland says so expressly, and the structure of the other regimes points the same way.
And a defective notice followed by a purported rescission is not a neutral misstep. Victoria deems it a breach of contract, and the New South Wales section makes the notice a term of the contract, so failure to comply is a contractual failure rather than a regulatory one.
Setting and extending the sunset date
The sunset date is a drafting decision with programme consequences, and in the reformed states it is close to irreversible without the purchaser’s agreement.
A few considerations tend to matter more than the rest.
The first is which event the date is actually keyed to. In most regimes the trigger is registration of the plan or issue of the occupation certificate or occupancy permit, both of which sit after the builder walks off site. Registration timeframes with the land titles office, final certification, and any conditions of consent that have to be discharged before the certificate issues all sit inside that gap, which is why a date set off the construction programme alone will generally be too tight.
The second is the approval pathway the project is actually on, including any modification that might become necessary along the way. A section 4.55 modification or a redesign in response to a certifier’s position can move the certificate date by months.
The third is whether the contract carries a workable extension mechanism at all. Queensland’s definition of “sunset date” in section 19B expressly picks up a later day where the contract provides for the parties to extend. That does not free a vendor from the consent regime, but it does mean the mechanism has to be in the contract to be available.
The fourth, and the trap, is what an extension request looks like in hindsight. An offer to extend the sunset date conditional on the purchaser agreeing to a higher price is precisely the fact pattern the reforms were written to address, and it is precisely the fact pattern that failed in Jobema. Whether an approach to purchasers is a genuine attempt to preserve the contract or an attempt to reprice it is a question the Court will look at, and it will look at it on your written record.
Finally, there is the question of whether the contract says what the statute requires it to say. Victoria’s section 10F prescribes the wording in the clause itself, and a contract that omits it is non-compliant from the day it is signed, well before anyone is thinking about rescission.
What reform is in motion right now?
Three Australian jurisdictions and New Zealand have all revisited this area in the last two years, and the direction of travel is not uniform.
New South Wales released a discussion paper in January 2025 and consulted until 7 March 2025. The proposals under consideration included making sunset clauses mandatory in contracts so buyers can withdraw if sunset events do not occur by a set time, requiring developers to disclose the status of the development against construction milestones, limiting a developer’s ability to extend sunset dates to reasons beyond the developer’s control such as weather or supply issues and imposing time limits on extensions, and potentially introducing penalties for inaction. The government’s stated intention was that the consultation would “lay the groundwork for legislation to be developed in 2025” (NSW Government ministerial media release, 31 January 2025). Any project with a long-dated New South Wales sunset clause is worth checking against where that legislation has got to.
Queensland ran a review of its own 2023 reforms between 1 September and 10 October 2025, seeking views from buyers, developers, industry and legal bodies on their effectiveness. As at the last update to the Department of Justice consultation page, “responses are being considered” (Queensland Department of Justice; ministerial media statement, 1 September 2025).
South Australia consulted on whether to legislate at all, as part of the Building and Construction Industry Review, with consultation closing in January 2025.
New Zealand went the other way. The Property Law (Sunset Clauses) Amendment Bill, a member’s bill introduced in April 2025, would have restricted the use of sunset clauses by sellers of vacant land. It was voted down at first reading, with the majority arguing that the additional regulation and court process could deter developers from offering off-the-plan sales and reduce the supply of off-the-plan housing. For New Zealand developers, that leaves the position governed by the agreement itself, by general contract law, and by the outer limits in the Unit Titles Act 2010 where a unit title development is involved. The practical implication is the reverse of the Australian one: the clause is likely to mean what it says, which puts more weight on how it is drafted and less on what a court might later permit.
What to ask your lawyer
These are the questions a property lawyer can answer on your facts, and that this guide deliberately does not.
On scope
- Is this contract inside the sunset clause regime in this state, given the lot type, the scheme type and the nature of the buyer? For a Queensland project in particular, is it a Land Sales Act contract or a community titles scheme contract, and what follows from that?
- Does the regime apply to my option structure, or only to the contract that follows exercise?
- Do any of the statutory exclusions apply, such as the Queensland large transaction or small reconfiguration carve-outs?
- If contracts were signed before the current provisions commenced, which version applies to them?
On the clause itself
- Does the clause contain every statement the statute requires, including the Victorian section 10F wording where relevant?
- Is the sunset event defined to match the statutory sunset event, or have we defined something narrower or wider by accident?
- Does the clause include a workable extension mechanism, and what does exercising it require?
- Is anything in the clause at risk of being read as intended to avoid the operation of the Division, which the Queensland court is expressly required to consider?
- Could any term in our standard contract be exposed under the unfair contract terms provisions of the Australian Consumer Law?
On the date
- Working back from registration or certification rather than practical completion, what date can we actually defend?
- What is our exposure if a material proportion of purchasers exercise on that date in a soft market?
If the date is approaching
- What exactly must the notice say in this state, and when does the 28 days run from here?
- Who must consent, and in what form, and does consent given before the notice count?
- What are the realistic prospects of a Supreme Court application on our facts, and what does the costs position look like if we lose or if the purchaser is found not to have unreasonably withheld consent?
- If the Court permits rescission, what is our residual exposure to damages or compensation?
And for your accountant or financial adviser, separately
- What happens to the tax and Goods and Services Tax (GST) position of a rescinded contract and a returned deposit?
- If pre-sales fall away on the sunset date, what does that do to the facility covenants, and when do we need to be having that conversation?