Buying off the plan involves an element of mystery and a high degree of uncertainty particularly for the unwary. Buying off the plan differs from when you buy an existing property. The main difference is that buying off the plan requires you to imagine the finished product, a building that is yet to be constructed and often exists only in the form of plans and artists impressions, whereas buying an existing property is much more certain insofar as what you see and inspect is what you get.
Just as each development differs so to does the contract for an off the plan purchase. Normally the contract for sale of land will contain a draft strata plan, a copy of any by-laws, a copy of preliminary plans submitted to Council, the type and standard of finishes to be used in the building and inclusions.
All off the plan contracts afford the developer varying degrees of flexibility to change the property. Part of this can be explained by the developer wanting to retain some discretion but more importantly the developer needs to retain flexibility to make changes when they are required for example where council or engineering requirements dictate a change must be made to the development. This is usually balanced by provision in the contract for a purchaser to be able to pull out if the change significantly affects the property to the detriment of the purchaser.
Another feature of the off the plan purchase is a delayed settlement date. Where an existing property can be completed within a 6 week period, an off the plan purchase can take many months if not years to complete. Normally contracts will contain a ‘sunset clause’ that allows a developer to extend beyond that date to accommodate unforeseen events. However it is important to document in the contract some final date after which the purchaser knows that if the plan is not registered by that date, the purchaser can pull out and be refunded their deposit.
Buying off the plan can be advantageous for both buyers and sellers. It is essential that legal advice is obtained before an off the plan purchase contract is signed because the contract can contain pitfalls for the unwary. At Everingham Solomons we have the expertise and experience to assist you in all aspects of buying and selling because Helping You is Our Business.
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