The state government is moving to prevent homebuyers being unfairly exploited by the use of sunset clauses when purchasing off-the-plan homes.

It will consult on proposed legislation to prevent developers from being able to unfairly terminate housing contracts and to ensure homebuyers receive timely information about the development’s risks and changes.

Currently, sunset clauses allow parties to terminate an off-the-plan contract if the development is not completed by an agreed date. These clauses permit developers to delay ‘sunset events’ so they can terminate contracts and resell land at higher market rates.

Under the proposed changes, a developer cannot terminate a sunset clause unless they have the home-buyer’s consent or the Supreme Court has ordered that the termination is ‘just and equitable’ in the circumstances.

If an attempt was made to trigger a sunset clause and the purchaser did not agree, the court would then consider whether termination is ‘just and equitable’ including vendor/seller bad faith, reasons for delay, and any increase in the lot's value.

If the vendor or seller made an application to the court for an order permitting cancellation of a contract, they would have to then pay the legal costs incurred by the buyer in that proceeding unless they can satisfy the court that the buyer unreasonably withheld their consent.

The government proposes that the sunset clause reforms apply retrospectively to existing off the plan contracts that remain current at the time the amendments commence, to protect those buyers. Retrospective application is consistent with reforms implemented in other Australian jurisdictions.

The state government is also proposing to increase the amount of information developers must disclose to homebuyers, to ensure they have timely and accurate information relating to the timing, delivery, cost and viability of the project.

Furthermore, the government is proposing to give homebuyers the right to rescind a contract if significant changes are made, as this can affect their purchase decision, and require developers to inform the purchaser within 14 days of any material change such as to the design or the draft plan. Purchasers would then have 14 days to either accept or rescind their contract.