Sunset clause on a commercial property purchase: what to do if you may miss it

Is a sunset clause the same as your settlement date?

No, and mixing them up is the commonest mistake buyers make once a deal starts to wobble. Picture two markers on a timeline. The first is the settlement date: the day you must complete and pay the balance. The second, further along, is the sunset date: the long-stop after which the contract can usually be ended if a required event hasn’t happened.

One sunset explainer describes the clause as one that sets a deadline for a key event, such as a development milestone or finance being secured. If the event hasn’t occurred by then, the contract can end or a fallback step applies. Who gets to end it depends on the drafting. Some clauses let either side walk, some only the seller, and some end the contract automatically.

For a business buyer the practical reading is this. The sunset date is a cliff edge for the whole deal. The settlement date is a nearer step, and missing it brings its own consequences without anyone needing the cliff. Plan to the earlier clock.

Where do sunset clauses actually turn up in commercial deals?

Not in every commercial contract. You are most likely to see one where the sale depends on something outside the buyer’s control:

• Off-the-plan or newly built commercial lots, where the seller must register a plan or finish construction.
• Contracts conditional on subdivision, rezoning or a development approval (see DA-approved land and lending).
• Deals conditional on finance, a lease assignment or a licence transfer, where the contract sets a date by which the condition must be satisfied or the deal lapses.

The strict consumer-style restrictions that apply to residential off-the-plan sunset clauses in some states don’t carry over automatically. The same Sprintlaw summary notes that commercial property contracts are not subject to the same statutory restriction, though general principles such as unfair terms and misleading conduct can still apply. In plain terms: on a commercial contract, the wording you signed carries more weight and your protections come mainly from the contract itself.

What are your options if you think you will miss the date?

Work through these in order. Each one is cheaper and quieter than the next.

1. Read the extension mechanics in your own contract

Look at the settlement clause and the special conditions together. Some contracts give a right to extend; many don’t.

Queensland is the clear example worth knowing. The REIQ commercial contracts (the Contract for Commercial Land and Buildings, 9th edition, and the Commercial Lots in a Community Titles Scheme contract, 8th edition) carry a clause that lets a party extend settlement by written notice. As ABKJ Lawyers explains, notice can be given up to 4pm on the settlement date, the new date can be no later than 5 business days after the scheduled date, and more than one notice is allowed within that same limit. The clause only came into the commercial forms in mid-2022, so an older form or a heavily amended contract may not have it.

Two cautions. First, 5 business days is a short bridge, so use it for a genuine timing slip, not an open-ended funding problem. Second, check your exact edition and any amendments in the special conditions, because a seller’s solicitor may have changed the clause. Other states’ standard contracts work differently, and many commercial deals use a bespoke contract, so don’t assume the Queensland rule applies to yours.

2. Ask the seller, in writing, before the date

If the contract has no extension right, or you need longer than it allows, the route is a written variation agreed by both sides. Sellers often agree when the reason is credible, the delay is short and the buyer is clearly still going to complete. Expect them to ask for something in return: a price on the delay (often default-style interest or a per-day fee), a larger or earlier deposit, or a firm new date with no further extensions.

Ask early. A request made three weeks out reads as planning. A request made on the afternoon of settlement reads as distress, and the seller’s negotiating position improves accordingly. Have your conveyancer draft the variation so that the original terms aren’t waived by accident.

3. Understand what a seller can do if you simply miss it

If settlement passes without an extension, the seller’s usual next step is a notice to complete. Commentary from NSW practitioners puts the standard period at 14 days from service, after which an unmet notice can allow the seller to end the contract. Depending on the contract, the buyer may also lose the deposit and face a claim for damages. Courts have also struck down notices that gave too little time, so a defective notice is not necessarily the end. Notice periods, interest and deposit consequences differ by contract and state, so treat the 14 days as a reference point and confirm yours with a lawyer. Our guide on default clauses and default interest explains how those costs build up.

4. Cover the shortfall with a short secured loan

Where the problem is money, not paperwork, the contract can often be kept alive by funding the gap. This is where a bridge sits alongside the legal steps: it doesn’t replace an extension, it removes the reason you needed one.

When does bridging finance fit a sunset or settlement problem?

It fits when three things line up: a real shortfall, security you can offer, and a repayment source with a date on it. Typical shapes:

• Your bank pulled out or slowed down. The valuation came in low or credit sign-off isn’t ready. See when bank finance falls through.
• Your own property sale hasn’t settled. You need the purchase funds now and the proceeds later.
• A refinance is in progress and will repay the short loan once it settles.

Because the loan must be for a business purpose, the lender will ask what the money is for (ASIC’s credit regulation pages explain why business-purpose lending is treated differently), and if you are buying through a company or trust, the entity details on the contract need to match your borrower details (see business.gov.au on structures and registrations). Security is usually a first mortgage, a second mortgage or a caveat over property you own, residential or commercial. A lender looks hard at the exit more than at monthly income, and no valuation is needed before approval. If the shortfall is a matter of days, read what to do when settlement is days away and use the settlement checklist so documents are ready in the right order.

It is the wrong tool when there is no exit, no security and no credible date: borrowing to cover a purchase you cannot ultimately fund simply moves the problem. A good lender will say so.

Not sure the numbers hold together? See what a short secured loan could look like on your contract →

A worked example (illustrative only)

A café owner has contracted to buy a small commercial unit for her business. The special conditions give her a settlement date on a Friday and a sunset date three weeks later. Her bank approved the loan in principle, but a valuation query has pushed formal approval beyond Friday, leaving a gap of roughly $150k that the bank would fund once approval lands.

Her options, laid out as a span:

Step	What happens	Cost of the delay
Week before settlement	Conveyancer checks the contract for an extension right and asks the seller for a written variation	Possible per-day fee or interest, set in the variation
Settlement date	If no extension, she needs the $150k from another source	Default consequences if she cannot pay
Short loan	A second mortgage over a property she owns funds the gap	Loan costs, repaid when the bank settles
Bank approval lands	Bank loan repays the short loan	Short loan closes

If she has both a variation and a funded gap, she settles on time or a few days late, with the seller’s agreement, and the sunset date never comes into play. Note what makes it work: the repayment source (the bank loan) is already approved in principle and she can show the lender that approval.

What should you gather before you talk to anyone?

Whether you are calling your conveyancer, the seller’s agent or a lender, have these on one page:

1. The contract, including special conditions and any variations.
2. The settlement date, the sunset date and who holds the right to end the contract.
3. The exact shortfall in dollars, and why it exists.
4. What repays any short-term funding, with the date and the evidence (bank letter, contract of sale, refinance pre-approval).
5. Security you can offer, with title details and the balance of any existing loan.

That is the same pack described in bridging loan requirements in Australia. If you have it ready, the conversations are shorter and the answers are better. Your first call should be your conveyancer, because only they can read your contract with legal authority; the finance conversation can run alongside it.

Ready to find out where you stand?

A contract with a date on it feels like pressure, and the best moment to deal with it is before the date arrives. If the gap is about money, we can tell you quickly whether a short loan secured over property fits the shape of your deal, and what’s missing if it doesn’t.

Enquiring takes about 60 seconds, and your credit file isn’t touched just for asking. Your details aren’t passed around a list of lenders; they stay with one team, and a real person reads your situation and calls you. All we ask is that you fill in the form accurately, including your settlement date and where the repayment will come from, so we can match the right structure the first time.

See if you qualify →