No Further Restrictions on Sunset Clauses in Sale and Purchase Agreements

In our last edition (Winter 2025), we discussed the Property Law (Sunset Clauses) Amendment Bill which was introduced into Parliament in April 2025. The bill was aimed at restricting sellers developing vacant plots of land from using ‘sunset clauses’ to cancel sale and purchase agreements and to add an extra layer of protection for buyers.

To recap, a ‘sunset clause’ is a provision in an agreement enabling the seller or buyer to cancel the agreement if the development is not completed by the specified or intended date. The bill was debated at its first reading in Parliament before being voted down by a majority of 68 to 54.

The majority argued that the passage of the bill would ultimately deter developers from entering into these sale and purchase agreements, and therefore reduce the availability of off-the-plan housing when there is already a shortage of housing in New Zealand.

It was also pointed out that there are already some existing protections afforded to buyers in legislation, specifically in section 225(2b) of the Resource Management Act 1991. This clause enables buyers to give notice to the seller to cancel an agreement if, two years after the granting of a resource consent or one year after the date of the agreement, the seller has not made reasonable progress in obtaining or depositing a survey plan.

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