Sunset Clauses – The New Bill Introduced into Parliament

The Property Law (Sunset Clauses) Amendment Bill was introduced to Parliament on 9 April 2025 and is tracking towards its first reading. The bill is aimed at restricting sellers developing vacant plots of land from using ‘sunset clauses’ to cancel sale and purchase agreements. It also provides an extra layer of protection to buyers who, in good faith, have made the commitment to purchase the property.

In this context, a ‘sunset clause’ is a provision added to an agreement for the sale and purchase of a plot of land in development which allows the seller or buyer the option to cancel the agreement if the development is not complete by the specified date.

There have previously been situations in which sellers have used these clauses to cancel an agreement, where there have been delays in development, only to then go and list the property at a higher price.

This legislation would require the seller to obtain the buyer’s written consent to cancel the agreement under a sunset clause. There would also be the requirement to give sufficient notice of, and reasons for, the proposed cancellation to the buyer in advance. This is the extra layer of protection given to the buyer.

If the buyer does not consent to the agreement being cancelled, the seller would need to apply to the High Court for an order permitting the cancellation. On the seller’s application, the court would only make the order if it is satisfied that its making would be ‘just and equitable in all the circumstances.’ The court would consider various factors including whether the seller has acted unreasonably or in bad faith, the reason for the delay in completing the development, whether the land has increased in value and the effect of the cancellation on the buyer.

If this law is passed and you are a seller or buyer who seeks to activate a sunset clause, please get in touch with us – we would be happy to assist you.

DISCLAIMER: All the information published is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this article. Views expressed are those of individual authors, and do not necessarily reflect the view of this firm. Articles appearing in this newsletter may be reproduced with prior approval from the editor and credit given to the source. Copyright, NZ LAW Limited, 2019. Editor: Adrienne Olsen. E-mail: adrienne@adroite.co.nz. Ph: 029 286 3650 or 04 496 5513.