Buying off the plan means that you cannot physically see or touch what you are in fact purchasing. Patience is required as it may be a lengthy period before construction is finalised and settlement of the purchase is able to be effected.
There are certain risks in an off the plan purchase which must be borne in mind. When purchasing an existing property you are of course able to recover relevant reports and a valuation for the purpose of securing finance immediately so that you know exactly what you are buying and what is its value. When purchasing off the plan you are not able to identify the quality of the construction or finalise a valuation for the purpose of sourcing finance, until such time as the construction is, at the very least, very close to completion.
The process involved in the purchase of an off the plan property can be daunting. Initially you may be invited to a "launch" by a real estate agent or a developer. The purpose of same is of course to sell the off the plan property to potential purchasers.
At the launch the real estate agent or developer will "sell" the proposed development. There may be a model or two of the final product available for inspection. There may also be samples of some fittings or fixtures and colour schemes available for the paint, tiles or kitchen.
You may decide at that time to proceed with the purchase of an apartment and it is likely that you will be asked to sign a Contract immediately. If you exchange contracts on the property without your solicitor providing a Section 66W certificate then you will receive the benefit of a 10 day cooling off period. This means that you would be entitled to rescind the contract for any reason within 10 business days of its exchange but you will forfeit 0.25% of the deposit.
You may also be encouraged to utilise the services of a solicitor or conveyancer that is on the premises and recommended by the real estate agent or developer. You should resist such encouragement. If it is your intention to engage your own solicitor, such as Brydens Lawyers, then you should make this known. If indeed you do consult with a solicitor on the premises at the time of the launch and engage that solicitor to act on your behalf it may be that the solicitor will provide, in accordance with your instructions, a Section 66W certificate which will mean that you must proceed with the proposed purchase and do not receive the benefit of the cooling off period.
It may also be that the property is being sold off the plan before the developer has even obtained a Development Approval from council. This should be noted at the time of your initial enquiries.
The Contract should contain the dates for when the balance of approvals for the project and work are to be finalised. For example, the contract should contain:
- A date that the Development Approval is to be obtained by. If the Development Approval is not obtained by that date then it may be open to you to withdraw from the contract:
- A date that completion of the building (evidenced by the issuing of an occupation certificate) and registration of the apartment are to be finalised by. If registration has not been effected by that date you may be entitled to withdraw from the contract.
This is usually referred to as the "Sunset Date". Contracts often provide for an extension of the Sunset Date by a further period of time agreed to for exceptional reasons, e.g. inclement weather.
Completion of an off the plan purchase of an apartment is generally due 21 days following registration of the plan and the issuing of the occupation certificate.
When purchasing off the plan you should ensure that you have:
- Adequately researched the market and satisfied yourself as to the value of the property that is being purchased.
- Discuss the proposed purchase with your Bank or Broker and obtained at least pre-approval of financing sufficient so as to satisfy you that you would be able to obtain unconditional Finance Approval at the time of completion; and
- A solicitor to review the contract to ensure it contains everything required and that it has been fully explained to you and that you understand the terms of the contract and the process to be undertaken in connection with the purchase.
Brydens Lawyers are experts in all conveyancing matters including off the plan purchases. To ensure that your interests are fully and properly protected engage Brydens Lawyers to act on your behalf in connection with the purchase or sale of any off the plan property. Contact Brydens Lawyers today for expert legal advice and representation on 1800 848 848 or at brydens.com.au. At Brydens Lawyers – # WE DO conveyancing.