Sunset clause

A sunset clause is a provision in an off-the-plan agreement allowing one or both parties to cancel the contract if the development is not completed — usually meaning titles issued or a code compliance certificate obtained — by a specified date.

The stated purpose

To stop buyers being locked into a contract indefinitely if a project stalls.

Why it can work against the buyer

In a rising market, a developer may have an incentive to allow the sunset date to pass, cancel the contract, and resell the property at a higher price. The buyer receives their deposit back but loses the gain and must re-enter a more expensive market.

This has been a live issue in New Zealand and Australia, and it is the single most important clause to have a lawyer review in an off-the-plan agreement.

What to check

• Who can cancel — both parties, or only the developer?
• The sunset date, and whether it can be extended unilaterally
• Whether the developer must make reasonable efforts to complete
• Whether the buyer receives interest on the deposit
• Whether the buyer has any remedy if the developer cancels and resells

A clause allowing only the developer to cancel, with a unilateral extension right, is heavily one-sided.

Common misunderstanding

Getting your deposit back is not being made whole. You may have held funds for two years, paid legal and finance costs, and missed other opportunities, and now face a market that has moved.

Negotiate before signing. Sunset provisions are frequently negotiable, particularly a mutual right to cancel. Once signed, you have what you have.

Related terms

Last reviewed: 1 August 2026 · General information only, not legal advice.

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