Volume #46: How I Explain and Negotiate Sunset Dates

Read Time: 2-3 minutes

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PROBLEM:

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A sunset date sounds serene, but in real estate it’s often a ticking clock.

It can protect buyers if a development is taking too long i.e. if correctly drafted, it should allow the purchaser to cancel the agreement if title or CCC has not issued by [insert date].

But if poorly negotiated, it can backfire.

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RISK:

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• If the market drops, you may want to exit.
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• If the market rises, a developer may cancel and resell.
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Some exploit these clauses to force buyers out and profit from price hikes.

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CONTEXT:

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Sunset clauses typically show up in:
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1) New Builds – The developer must secure title and CCC by a set date (often 1–3 years).
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2) Pre-Existing Homes – Used when subdividing the title or waiting on CCC for unconsented works.
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Delays rely on external parties — buyers have little control.

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SOLUTION:

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Negotiate who triggers the clause.
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This should be unilaterally in the purchaser's favour i.e. the developer should not be able to exercise the sunset date and cancel the agreement.
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• Buyer Control – You can walk away if key approvals don’t happen on time.
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• No Seller Control – Prevent developers from cancelling to chase higher profits.
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• Bonus Tip – Negotiate for the purchaser to receive at least one extension to the Sunset Date if the property is almost complete.
  
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1. Example - Sunset Date and Extension
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• Sunset Date: If Settlement has not occurred by [insert date] (the "Sunset Date"), the Purchaser shall have the right to cancel this Agreement by providing written notice of cancellation to the Vendor.
  
  Upon receipt of such notice, this Agreement will terminate and be at an end.
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• Waiver of Right to Cancel: If the Purchaser does not issue a notice of cancellation under clause 1 on or before ten (10) working days after the Sunset Date, such notice being given in writing and time being of the essence, the Purchaser’s right to cancel this Agreement will be deemed to have been waived.
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• Extension of Sunset Date: The Purchaser may, at their discretion, extend the Sunset Date by up to six (6) months.
  
  To exercise this right, the Purchaser must provide written notice to the Vendor prior to the expiration of the Sunset Date.
  
  The extension will be effective upon receipt of such notice by the Vendor.

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TL; DR – Sunset Clause Checklist
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✔ Only the buyer should have cancellation rights.
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✔ The seller should NOT cancel if prices climb.
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✔ Negotiate at least one extension option.
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✔ Consult a lawyer to ensure you’re protected.
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A sunset clause can safeguard your purchase if structured correctly.
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But if you give away control, you risk losing your property when the market shifts.