Property Buying Guides
Whenever a property is bought off the plan, the contract will include a Sunset Clause. This is the maximum time allowed for the full completion of the project. The end of this time period is called the Sunset Date.
This clause is there for the benefit of buyers. While the project could be completed beforehand, having a Sunset Date gives buyers an chance to plan ahead and provides a timeline of when they can move in or look for tenants.
The clause is also there to give the developer time to allow for any unforeseen delays that occur due to poor weather conditions or unexpected industry strikes.
Typically, most projects will be fully completed well before the Sunset Date. However, in circumstances where it is not completed, the buyer has the option of walking away from their contract and have their deposit refunded in full.
While this seems like a win-win scenario for the buyer, the best scenario is for the development to be completed as planned for the following reasons:
1. Time spent to find the property.
Think of the time it takes to shop around and finally find the right place you want. While some may find one right off the cuff, for most there is a significant time investment that goes into finding the perfect investment.
2. The pre approved loan is for the property waiting to be built.
You've gone through the process of finding a lender who will finance your investment. That pre approved application is for that property. If the contract voids and you decide to walk away, you will have to go through the pre application process all over again for a new property. Not only does this take time, it can have an adverse affect on your credit rating.
2. Time lost waiting without benefiting from the end result.
The property you purchased may be your new home. To never be able to live in it is a disappointment in itself. On top of that, you may have bought off the plan to be able to afford that home because buying an established property wasn't within your budget. Fast forward a couple of years and prices for property have soared. You may not be able to afford to buy again, even off the plan. You would also have missed out on the capital growth of your property.
If a buyer finds themselves at the Sunset Date but wants to continue with their agreement, a new contract can be negotiated between parties. Obviously the best case scenario is for things to go as originally planned. This is why it is important to do your research and purchase off the plan properties from a reputable developer.