Sunset clauses may burn investors

The loophole allows property developers to exercise a "sunset clause" in property purchase agreements where the agreement is entered before the property’s construction has been completed.

A sunset clause is often included in contracts where the property is still under construction. It puts an expiry date on an offer if certain terms within a contract are not met.

The director of Propellor Property Investments, Nikki Connors, says some developers are using the sunset clause to get out of a contract when they realise they could have sold a property for more.

Connors says a home buyer or property investor may enter into the agreement while the potential home is at "blueprint stage" and pay a deposit to secure the property.