With an Off the Plan Contract, usually the property you are purchasing has not been built. It may be the case that some other properties in the development have already been built, and you may be able to physically inspect those, however, it is unlikely that the property you are set to purchase will be built completely.
If the property has not been built at the point of signing of the contract, then it does not exist and at that moment in time there is nothing to sell to you. This means your contract will be conditional on the property being built, and being registered with the Land Registry of the state. This has a number of implications:
- There may be Changes to the Marketing Material or Plan you viewed
Any building in Australia requires approval from the Local Council. Usually plans are submitted to the Council for approval, and then construction will commence. However, each property will also need to be equipped with a supply for water, drainage and council services. As such, plans already submitted to the council may need to be changed. How does this affect you? This affects you in that the plan you viewed may not be the end result! So essentially the developer can change the layout or position of your unit in order to comply with council requirements. However, the developer cannot change the property in a way that materially disadvantages you. It is accepted that any change in the size of the property which decreases the size by more than 5% will materially disadvantage the buyer, and if this is the case the buyer can pull out of the contract, and claim back their deposit.
Keeping this 5% in mind, it is important to ascertain how the unit/property is being measured. When you are viewing marketing material for an Off the Plan Contract, you will be shown a floor plan, and it will show the measurements of the property. However, depending on the method used to measure the property, the measurements you are shown could be taken from the inner walls or the outer walls. Obviously, it goes without saying that measurements taken from the inner walls, will in reality lead to a much larger space than measurements of the same unit taken from the outer walls, as you are not including thick concrete walls in your measurement.
A large number of these Off the Plan Contracts will provide for variations, so the layout of the unit may be changed from that which you viewed, the location of the unit may change, the view from the unit may change, the finishes to fixtures and fittings such as kitchen units may change (but must be of a similar or better standard). You cannot object to any of these changes, unless the change materially disadvantages you.
- The Property will likely have a Sunset Date
A Sunset Date is a clause inserted into an Off the Plan Contract. This clause allows the builder a certain period of time in which to build the property, obtain the necessary council consents and register himself as an owner of the property. A Sunset Date will likely be sometime in the future, usually anywhere between 18 months and 5 years. This does not mean that the property will not be built before the Sunset Date, often it will be built a lot sooner, but it simply allows the builder a lot of extra time should he need it. If the property is not built before the Sunset Date, you as the purchaser can pull out of the contract. New South Wales legislation prevents a builder from pulling out of a contract, despite the sunset date passing, without providing notice to a buyer, with the reasons they wish to pull out and gaining the buyer’s permission.
- Practical Completion
Once the property has been built and registered in the name of the builder, the builder will then provide you with a period of time, usually 14 days in which to settle on the property. It is important that your solicitor is on top of things, as there is a lot to do in this 2-week time scale. Buyer’s searches must be ordered and considered, transfer documents must be prepared, notifications to the relevant Office of State Revenue may need to be prepared and your lender needs to made aware of the date of settlement and pushed to ensure settlement funds are ready for settlement. Our conveyancing and property solicitors make sure that all dates and tasks are diarised so that you can be sure of settling within this 2 week period.