Amendments to the Land Sales Act 1984 (QLD) passed the QLD Parliament on 14 November 2023. The amendments strengthen buyer protections by limiting when sunset clauses can be used to terminate ‘off the plan’ contracts for the sale of land.

The commencement date is yet to be proclaimed.

New Regime

Under the new regime, a seller can not terminate an off the plan contract under the sunset clause unless the seller has given the buyer a sunset clause notice and the buyer consents, in writing, to the termination of the off-the-plan contract under that clause. The buyer must act reasonably.

If the buyer does not give consent to the termination of the contract, the seller can apply to the Supreme Court requesting that an order be made permitting the seller to terminate the contract under the sunset clause.

In deciding whether it is just and equitable to make an order that the contract be terminated under the sunset clause, the Court must consider the following matters:

1. the terms of the contract, including whether a term has been inputted with the intention of avoiding the new sunset clause regime;

2. whether the seller has acted unreasonably or in bad faith;

3. whether matters beyond the seller’s reasonable control affected:

   • the seller’s ability to settle the contract; or

   • the viability of the seller’s business;

4. whether there is a reasonable prospect of the seller settling the contract;

5. if the seller can not settle the contract, what actions the seller has taken to:

   • settle the contract; and

   • minimise the effect of any matter that affected the seller’s ability to settle the contract;

6. the effect of settling the contract on the seller;

7. the effect of terminating the contract on the buyer;

8. the extent of the buyer’s performance of their obligations under the contract;

9. whether the proposed land has increased in value; and

10. any other matter the court considers relevant or as is prescribed by regulation.

Unless the Court is satisfied that a buyer has acted unreasonably in refusing to consent to the termination of the contract, the seller will be responsible for the buyer’s legal costs.

Termination under the sunset clause provisions may also be prescribed by regulation. Details will be published when they are to hand.

Sunset Clause Purpose

Sunset clauses were initially intended to shield sellers from liability in case they couldn't fulfill a contract due to delays beyond their control (like legislative changes, supply issues, financial constraints, or approval problems). However, sellers have also used this clause to end contracts in circumstances where they believed that they could achieve a higher price through resale.

This amendment brings Queensland’s sunset clause legislation in line with changes introduced in New South Wales in 2015 and in Victoria in 2019.

While the commencement date for the changes is yet to be proclaimed, the changes will impact all off the plan contracts that are entered into but not yet settled before the commencement date. Sellers are encouraged to turn their mind to the changes and update their pro forma off the plan contracts of sale.

Further Information:

If you have any legal questions relating to the above, please contact us through our online form or via email at hello@legalsynthesis.com.au.

DISCLAIMER:

The information in this article is of a general nature. It does not constitute formal legal advice, and should not be relied on as such. If you are seeking legal advice about a specific matter please contact us to discuss.