Sunset Clause Exposure Calculator NZ

Updated  Sunset clauses vary widely between contracts. Who can cancel, and when, is a matter for your own agreement.
Quick answer A $85,000.00 deposit paid on Tuesday 1 September 2026 against a completion expected 18.0 months later costs $651.82 in returns given up, once the interest the deposit earns is allowed for. The buffer between expected completion and the sunset date is 184 days. If the clause is triggered you get the deposit back, but you are $50,000.00 worse off against a market that has moved.

Buying off the plans is a trade of certainty for time. You fix a price today against a house that does not exist yet, and in exchange you hand over a deposit you will not see again for years and accept that the thing might not be finished when they say. Both sides of that trade have a dollar value and only one of them usually gets calculated. Buyers know what they are paying and what the finished place might be worth; almost nobody works out what it costs to have six figures sitting in a trust account earning less than it could, or what the gap between the promised completion and the sunset date is actually protecting them from. That gap is the part to look at hardest, because a sunset clause is a safety valve for the buyer in a flat market and can be something quite different in a rising one.

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The purchase
The dates
What the money would otherwise do
Deposit locked up
$85,000.00
for 18.0 months
Net cost of the wait
$651.82
returns given up, less trust interest
Buffer before the sunset date
184 days
6.0 months of slippage allowed

What the locked deposit costs

Deposit$85,000.00
Locked fromTuesday 1 September 2026
Until expected completionWednesday 1 March 2028
Time locked up18.0 months
What it would have earned elsewhere$6,447.92
What it earns in the trust account, to you$5,796.10
Net cost of the wait$651.82

The two outcomes

OutcomeYou end up withAgainst the alternative
It completes on time
you own a house worth more than you paid		$50,000.00$49,348.18
The sunset clause is triggered
deposit returned, no house, market has moved		$0.00-$651.82

The gap between the two outcomes is $50,000.00. That is what the completion risk is worth, and it is why the wording of the sunset clause matters more than the deposit interest.

How much slippage the contract allows

Expected completionWednesday 1 March 2028
Sunset dateFriday 1 September 2028
Buffer184 days
Total time from contract to sunset24.0 months

A buffer of 6.0 months is reasonable protection against ordinary construction delay. A short buffer means the clause can be reached by a delay that would otherwise be unremarkable, which is when the question of who is allowed to cancel becomes important.

Read the sunset clause before you sign, and have a lawyer read it too. These clauses are not standard. The things that matter are whether cancellation is available to both parties or only to the developer, whether there are any conditions or good faith requirements on its use, and whether the sunset date can be extended and by whom. In a rising market a clause that lets the developer cancel unilaterally lets them resell at a higher price at your expense, and getting the deposit back does not make you whole. This page cannot tell you what your clause says. The market movement figure is your own estimate and not a forecast, the returns are indicative and not guaranteed, and nothing here accounts for the risk that the developer becomes insolvent, which is a separate question to ask about.

The deposit is the smaller half of the exposure

The opportunity cost of a locked deposit is real, and on the figures here it is also modest, because the trust account interest offsets most of what the money would have earned elsewhere. That is worth knowing mainly so it can be set aside. The exposure that matters is the price. You have committed to a purchase at today's price against delivery in two years, and the whole benefit of that arrangement depends on the deal actually completing. If it does not, you have spent the intervening period out of the market with your capital immobilised, and the same money now buys less. That is the loss, and it does not appear on any statement.

Negotiate the interest anyway

Who receives the interest on a deposit held for two years is a genuine sum of money and it is negotiable. It is also one of the few things in an off the plans contract a buyer can realistically move, because it costs the developer little and is not central to their pricing. Set the field to the vendor and the cost of the wait multiplies. If the contract is silent or points the wrong way, it is worth asking, and worth asking early rather than at signing.

The buffer is what the clause is really about

A sunset date sitting six months past the expected completion is protection against the ordinary slippage that affects most construction. A sunset date sitting a few weeks past it is not protection at all, because a delay that any builder would call routine reaches it. Whether that matters depends entirely on who the clause lets cancel. If only you can cancel, a tight sunset date is a benefit. If the developer can cancel, a tight sunset date is a mechanism for them to escape a price that has become unattractive to them, and the tighter it is the more useful it is for that purpose.

Worked example

A buyer signs on Tuesday 1 September 2026 to buy off the plans at $850,000.00 with a 10% deposit of $85,000.00. Completion is expected on Wednesday 1 March 2028, which is 18.0 months later, and the sunset date is Friday 1 September 2028.

Over that period the deposit would have earned $6,447.92 at the 5% the buyer could otherwise get. It earns $5,796.10 in the trust account at 4.5%, and the contract gives that interest to the buyer, so the net cost of the wait is $651.82.

If the build completes, the property is expected to be worth $900,000.00 against the $850,000.00 paid, a gain of $50,000.00, or $49,348.18 after the cost of the wait. If the sunset clause is triggered the deposit comes back and the gain does not, so the buyer is $50,000.00 worse off than if it had completed. The buffer between expected completion and the sunset date is 184 days.

How this is calculated

The deposit is the purchase price multiplied by the deposit percentage. The time locked up is the number of days from the contract date to expected completion, expressed in months at 30.4375 days each. The return given up is the deposit compounded at your alternative rate over that period, less the deposit itself, and the trust account interest is the same calculation at the trust rate, credited only if the contract gives the interest to you. The net cost of the wait is the difference between them. The gain on completion is the expected value at completion less the purchase price, and the net gain subtracts the cost of the wait. The buffer is the days between expected completion and the sunset date. No allowance is made for market movement between contract and completion beyond the value you enter, because that is a forecast rather than a calculation.

Official sources

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Frequently asked questions

What is a sunset clause?

A sunset clause sets a date by which the development must be completed and title issued. If that has not happened by the sunset date, the clause allows the contract to be cancelled and the deposit returned. It exists because an off the plans contract would otherwise bind a buyer indefinitely to a build that might never finish, and it is a normal and necessary part of the agreement.

Can the developer use the sunset clause to cancel and resell at a higher price?

This is the central risk of the clause and the reason it deserves attention. In a rising market a developer whose project is late may prefer to cancel and resell at current prices rather than complete at the price you agreed. Whether they can depends on how the clause is drafted, including whether cancellation is available to both parties or only one, and whether there are conditions on its use. It is the single most important thing to have a lawyer read before you sign.

Do I get interest on my deposit?

It depends entirely on the contract. The deposit is normally held in a solicitor's or agent's trust account, and who receives the interest it earns is a matter for the agreement rather than a default rule. On a ten per cent deposit held for two years the interest is a meaningful sum, so it is worth knowing which way your contract points and worth asking for it to point at you.

What happens if the sunset clause is triggered?

The contract is cancelled and your deposit comes back, usually with whatever interest the contract says you are entitled to. The problem is not the deposit, it is the time. You have been out of the market for the whole period, and if prices have risen the same money now buys less than it would have when you signed. That is the real loss, and it is not compensated by getting the deposit back.

Is buying off the plans a bad idea?

No, and the calculation here is not an argument against it. Fixing a price today for a house delivered in two years is genuinely valuable if prices rise, and buyers often get a better property than they could otherwise afford. The point is that the price certainty is bought with a locked deposit and a completion risk, both of which have a dollar value that should be weighed against the benefit rather than assumed to be zero.