Buying off the plan is an increasingly popular method of purchasing property, particularly in this market.
- What you buy may not be what you get!
The marketing of the property and the end product are often at odds. The contract usually allows the Developer to make amendments as required to bring about the registration of the plan or the construction of the property. More and more we are finding that the Developer wants as much control as possible over the process. The result is that the contract may allow for changes as ‘desired’ by the developer. This may include changes to the layout, location, and even the size of the lot.
- When do you settle?
Settlement of off the plan purchasers are usually contingent on the registration of a new plan of subdivision, the registration of the strata plan or the issuing of the occupation certificate. What is uncertain is when this will occur. The contract will usually contain a final date for these events (a ‘sunset date’), after which a party may be able to rescind the contract if the Vendor is not able to complete. Unfortunately, some contracts will allow the Vendor to extend this date, leaving the purchaser stuck in a contract with no end in sight.
- Today’s prices, but what about tomorrow’s value?
One perceived benefit of the off the plan contract is to pay today’s prices for a future property. In a booming economy, this can be quite beneficial. If the market suffers a downturn the purchaser may be locked into paying for example $800,000.00 for a property worth $600,000.00 at the time of settlement. If finance is required, this can prove disastrous.
If you have further questions, please contact us at frank@franklaw.com.au
This is not legal advice.