Buying off-the-plan generally refers to purchasing a property that has not yet been constructed. When building is complete and the contract settles, the purchaser then owns a brand-new apartment or home.
The decision to buy off-the-plan is influenced by the marketing campaigns and promotional materials as they have not yet had the opportunity to walk through the exact home they are looking to purchase. Accordingly, these purchasers requires special considerations and we recommend you bringing the contract to us in the early stages so we are able to go thoroughly through it and explain the conditions. We will provide guidance and advise to you so as you are able to make a fully informed decision.
We recommend you visit out article ‘BUYING A PROPERTY – WHAT DO I NEED TO KNOW’ where we break the conveyancing process down into three sections which will be of assistance to you once the property is completed.
What am I buying?
It is important to know that the final construction may vary in design or size from the draft plans provided to you. These changes may be necessary as they may for in instance, involve registration requirements or the availability of materials for fittings and finishes. The extent of the variation allowed is governed by the contract however, the right to alter should never jeopardise the quality of the end product.
This is why we express the importance of the contract conditions and ensure a thorough review is undertaken so as your rights are protected and you are contractually able to rescind the contract should any amendments fall outside the four corners of the contract.
You may find that your off-the-plan property are in a strata complex. This means that your property has been divided into lots and common property. You will own your individual lot and will have an interest in a common property with other lot owners. When settlement occurs, you will be become a member of the Owners’ Corporation and you are bound by its by-laws that regulate matters and future developments including parking and the keeping of animals. You must ensure that these By-laws are read carefully so you understand the effect of them.
Once you are a member of the Owners Corporation, you must contribute to a sinking fund for long-term work such as repainting and you must pay regular maintenance and outgoings. The amount you contribute is determined by the unit entitlement of your lot and the value of your vote at strata meetings.
Do I purchase on completion?
Completion for an off-the-plan contract, unlike usual purchases, does not happen for months after the date of exchange. Settlement is subject to the registration of plan of subdivision and an occupation certificate must be issued. The contract will contain terms to allow for contingencies that may delay settlement. These terms are labelled ‘completion date’ or ‘expiry date’ or ‘sunset date’.
Unfortunately, the date of completion is not ascertained until well after the exchange of contract. It is therefore best to be prepared to allow for a later or in some circumstances, earlier settlement date than anticipated.
It is always important to keep your banks informed so that formal finance is available for the date of completion and you must also consider factors that may influence your ability to complete the purchase such as loss of employment and other personal circumstances.
There are lots of things to consider when purchasing a property off the plan and it is important you understand the terms of the contract and what to expect. Contact Carter O’Neill Legal today and speak to one of our experienced property lawyers.