Off the plan property is becoming more common with the property boom occurring in Queensland. It’s very important you consider the significant risks in purchasing off the plan property. Find out more about off the plan property conveyancing below:
What is buying off the plan property?
Buying off the plan involves entering a contact on an unconditional basis before the building has finished construction and/or registration of the plan of subdivision.
These contracts can be very complex and risky so it’s important to have our experienced off the plan conveyancing team review your contract before signing. There may be significant risks for you as the purchaser if you don’t review the contract in-depth.
After 25 years of legal experience, our property and conveyancing team have assisted many clients through the off the plan purchasing process.
There are a few key issues to review and discuss before signing any off the plan contract.
Key issues for off the plan property
Research on builder and developer
It’s important to remember that your house, unit, or townhouse isn’t complete when signing an off the plan contract. When you buy off the plan, you enter into a contractual agreement with another party which is usually the developer and/or builder.
You should research the developer and builder to see what their industry reputation is like, to ensure they have experience in success projects in the past.
In most off the plan contracts, the developer will engage a separate builder so it’s important to do your research on both developer and builder.
Contracts
The contracts used in off the plan sales are more detailed than the standard REIQ contracts that are used in Queensland for your normal property transactions.
Generally, the developer will have their own contracts drawn up by their legal team, so it’s important to have your contract reviewed to ensure your rights are protected. There can be significant consequences if you’re wanting to terminate your contract without reviewing it.
If you’re unsure of the off the plan contract in any way, our team can review the contract for you and provide recommendations.
Contract Variations
Most developers will include contract variations in their off the plan contracts should they need to make any changes to the original plans. These can be from minor changes to quite major changes which can have an impact on your value of the property. It’s important to consider getting us to review your contract prior to signing in case these variations affect you.
Sunset Clause
A sunset clause puts conditions and limits on the off the plan contract. This could let you or the developer cancel the contract by a certain date.
It’s important to understand when the sunset clause can be activated, why it can be activated and what happens when it is activated. You need to be aware of what can happen if there are delays in your property build or registration.
Our experienced off the plan property team can update you with the best options regarding a sunset clause in your contract.
Settlement
Exact settlement dates are usually hard to define with off the plan property purchases. The developer will have a special condition in the contract that provides you notice that the building is complete, and the land titles are registered. If you have chosen a reputable developer and builder, you should receive updates throughout the process to ensure timeframes are being met.
Can I on-sell the property before settlement?
The short answer is yes, but that is subject to the developer providing their approval. Again, this is potentially another clause or section in your off the plan contract which should be reviewed by our experienced team.
Often this is called transfer by direction.
Due diligence
Purchasing a property is one of the biggest transactions you will make in your life, if not the biggest. It’s important therefore that you do your due diligence to ensure you aren’t at financial risk. Be aware that due to timeframes, sometimes there can be issues with off the plan contracts so it’s important to know all the timeframes, costs, and critical dates. Discuss your options with our team today.
Stamp Duty
Stamp duty is a common phrase used in many property contracts. It refers to a once-off tax that is paid to the Queensland Government when purchasing property. There are concessions that can be applied dependant on the property and property value. Stamp duty to be paid is calculated by a scale that differs for the dollar value of the property or land. Talk to our team if you would like to discuss the stamp duty costs and concessions available to you.
Other key issues for off the plan contracts include:
- Purchasing entity
- Disclosure statement
- Paying the deposit
- Cooling off period
- Defects
- Inclusions
- Warranties
The above key issues for off the plan contracts are a general guide only. You should always consult with our property lawyers before signing any off the plan contract.
What are the next steps to purchasing?
Our team of experienced property lawyers can guide you through the purchasing process to achieve the dream of owning your own property. As you can see above, there are many issues to consider when signing a contract.
Contact our team today to discuss your property options.