Recent incentives provided by the Federal Budget have generated more interest in off the plan properties. However, buyers should keep in mind certain contract conditions before signing on.
Off the plan contracts are usually subject to either or both of the following conditions being satisfied:
- the registration of the proposed plan of subdivision with the Registrar of Titles; and or
- the issue of an occupancy certificate
It may not be ideal for purchasers looking to purchase and move into a property soon as these conditions may take months to years to be satisfied. Settlement cannot occur unless these conditions are fulfilled.
Purchasers should be aware of sunset clauses in off the plan contracts, as they essentially set a strict time limit for developmental works and conditions to be satisfied. This may not be ideal for purchasers looking to purchase and move into a property soon as these clauses often state a 24-48 months time frame. Failure to complete works in time can cause the the contract to be rescinded.
Material Changes to Land Clauses
It is common for off the plan contracts to include a clause that enables Vendors to alter the proposed plan of subdivision.
This can include changing the boundaries of the land, which could affect the size of the land, therefore affect the value of your purchased property. In other words, what you signed up for and what you receive could be completely different.
Termination of Contract Clauses
An off the plan contract may include conditions that enables the vendor and developer to cancel the contract in the event certain conditions cannot be met.
This can have a devastating effect on a purchaser who has been waiting for years for the contract to complete.
Unfavourable contract conditions
It is not uncommon for off the plan contract to include conditions to the benefit of the Vendor.
There may be terms that restrict purchasers from selling, transferring, assigning, or disposing the property or interest in the property prior to completion of construction without obtaining approval from the vendor.
It is crucial for a purchaser to understand the terms of sale before signing a contract to purchase an off the plan property.
Purchasers should also be aware of stamp duty payable to ensure sufficient funds are available to complete the purchase when due. Further information on off the plan stamp duty treatment can be found here.
At W Legal Group, we have a team of experts who are experienced in advising on off the plan contracts. Contact us on +61 3 9590 618 or email us at email@example.com for further support.