Sunset clauses in new-build contracts are becoming more common and it’s a case of buyer beware.

A sunset clause is a condition included in a contract that states if a specified event does not occur by a certain date, the purchaser, or in some cases both parties (the purchaser and the vendor) can cancel the contract.

In most situations, sunset clauses in new-build contracts are there to give the purchaser added protection and allow them to cancel the contract if certain conditions are not met. But we are seeing more cases where both purchaser and vendor have the option to cancel through this clause and it’s leaving some purchasers exposed.

Why? Purchasers have almost no control over the building process so meeting the documented conditions is largely up to the vendor, giving some vendors the upper hand if they opt to cancel the contract for financial gain, with little or no protection for the purchaser. 

Buying and building your own home may be synonymous with the Kiwi way of life but there’s a lot to navigate and buyers aren’t always aware of the potential risks.

When it comes to purchasing or building a property, as lawyers, we’re here to break down the steps for you and help you navigate the purchase process. We can provide practical guidance and ensure the sales and purchase agreement you sign protects your best interests and not someone else’s.

At the end of the day, when it comes to purchasing a property, paying for advice is a very small cost compared to the purchase price, particularly when you consider the potential loss.

If you are thinking of buying or selling, we’ve put together a range of tools and resources to help make the whole process a little easier for you: click here

Residential property