Off the Plan Sunset Clause

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From: Neil Iffland


A friend is buying an OTP unit in inner Sydney. The contract has a clause whereby if the project is not completed after 30 months the developer can pull out of the sale. He is worried that if the market really jumped the developer may delay on purpose.

However his lawyer says this is a standard clause in OTP contracts. Anyone know if that is correct ?
 
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Reply: 1
From: Hiram Ng


This is a standard clause in OTP.

But usually either parties can rescind. (ie either the developer or the purchaser).

It is unlikely you can get this changed to a lower time frame: the developer's financiers don't like the purchasers to be able to get out of a contract if there are any unexpected building delays.

You could ask to change it to a higher time frame eg 48 months, thus making the developer think twice about holding on to it on purpose (development finance interest racking up every day), but your risk is if the market crashes you can't get out of the contract till the end of that 48 months. Sunset clauses are a two edged sword.

Hiram
 
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From: Neil Iffland


Thanks for that information Hiram, much appreciated.
 
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Reply: 2.1
From: Jerry Maguire


hi Neil,
i bought an OTP place in mel in jan2001 and there is no sunset clause at all.
the place doesn't settle until 2005 that is about 5 yrs that is about 60 mths!
all you need to do is to get it taken out of the contract if it is there which i have done it myself or else you don't buy it.
 
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