A Gold Coast man says he had his home ownership dreams shattered after a developer used a termination clause to rip up his vacant land contract before offering to sell it back for an extra $200,000.
Key points:
A sunset clause offers the right to terminate a sale contract for land if it’s not settled within 18 months
When a sunset clause was invoked, Daniel Lees was priced out of the housing market
Experts claim sunset clauses are critical in certain instances
Daniel Lees said he and his former partner signed a contract with CFMG Capital to purchase a block of land to build a home at Elevate estate at Ormeau Hills in mid-2020.
Mr Lees said they put down a deposit to secure the $254,000 parcel of land and began to design their “dream home”, but over the next several months they became concerned.
“We just didn’t hear anything,” he said.
“We went out every week to see what was going on with the construction side or the development side of it, there just didn’t seem to be much movement.
“I figured they were waiting because land values were going up, and the build of the house we wanted went up like $80,000 as well.”
Mr Lees said, in March last year, the couple were informed the developer had invoked the sunset clause and terminated their contract but they got their deposit back.
“They did offer us to buy the land back but it was for $200,000 more than what we initially paid,” he said.
Daniel Lees put down a deposit on a parcel of land but his contract was terminated 18 months later.(ABC News: Dean Caton)
Mr Lees said the pair were still left thousands of dollars out-of-pocket due to undertaking planning and design work to build their home, and the process put strain on their relationship.
“We got an architect in to do a custom build for us, so obviously you have to pay them for the planning and estimates of all the materials,” he said.
“Then there’s the cost of conveyancing lawyers and, because we thought this was our forever home, we purchased another dog.
“It was really stressful, the financial stress was hard and then we ended up separating because there was just too much going on.”
Mr Lees said the process had since left him priced out of the housing market.
“Because house prices and land values went up so much in that time, I’m now stuck out of the housing market,” he said.
“My deposit, which was more than enough back then, is no longer enough.
“The consequences for me not even being able to pull out of that contract [early] to get my deposit back, to purchase somewhere else while house prices were rising, is also dire.
“It’s not right and I feel like the developers knew what they were doing but they didn’t care about the consequences.”
Sunset clauses an important tool for buyers and developers
Under Queensland law, the developer CFMG Capital did nothing wrong.
A sunset clause provides a party — either the developer or the buyer — with the right to terminate an off-the-plan sales contract for land if it is not settled within 18 months.
In a statement, a spokesman for CFMG Capital said a number of contracts at the Elevate community were terminated in accordance with the clause.