Sunset clause on developer?

Discussion in 'Legal Issues' started by JKWS, 9th Jan, 2022.

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  1. JKWS

    JKWS Well-Known Member

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    Hello almighty brains of PC.

    Hope everyone has found time to enjoy the holiday period!

    What is your opinion on placing a sunset clause into the “off plan” purchase contract, not to benefit the developer (we legally cannot pull out of the deal) but to benefit the purchasers?

    For example, should they not like the finished completed development they(the purchasers) can pull out and have their deposit repaid.

    Is this unheard of?
     
  2. Trainee

    Trainee Well-Known Member

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    Why would the developer agree to it? How would you get them to agree to it?
     
  3. JKWS

    JKWS Well-Known Member

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    Developers don’t necessarily like having to sell off the plan as it reduces the return compared to selling the finished product. They sell down stock to gain more favorable finance.
     
  4. Trainee

    Trainee Well-Known Member

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    Be interested to know how the lenders see this. If a contract with this sort of get out of jail free clause counts towards presales for lending, what's to stop developers from just preselling everything to straw buyers with this clause?
     
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  5. Scott No Mates

    Scott No Mates Well-Known Member

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    AFAIK, it's a requirement in NSW
     
  6. JKWS

    JKWS Well-Known Member

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    Can you please elaborate, tried to google AFAIK but got nothing.

    Its definitely a no go for developers as of only a few years ago, just not sure if this is the case for the purchasing party
     
  7. Scott No Mates

    Scott No Mates Well-Known Member

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    Last edited: 9th Jan, 2022
    Silly Goose and lixas4 like this.
  8. JKWS

    JKWS Well-Known Member

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    Scott No Mates likes this.
  9. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Sunset clause laws vary from state to state. Its one for your solicitor. Some states have not updated laws and other like NSW banned the whole practice.
     
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