Over the years, buying off the plan has become a popular choice for investors and home buyers because it’s one of the easiest ways to enter the property market.
To put it simply, “buying off the plan” is when you enter into a contract to buy residential property which is still being developed.
While there are many perks when it comes to buying off the plan, there are a few questions recommended to ask the developer prior to signing a contract.
Expert in the field, Hickey Lawyers owner-partner Dan Marino has provided his four top conveyancing tips to help you with buying off the plan.
1. Ask what it is you’re buying in an off the plan contract
Given the property you are acquiring in an off the plan contract is yet to be built, it is important to ensure the developer is bound to give you finishes and fittings of at least a standard equivalent to the standard represented to you under the contract and/or in any marketing material for the development.
It’s important to ensure the area of the dwelling disclosed under the draft plans is not reduced after construction by an area or more than 5% of that disclosed area.
The buyer needs to appreciate that during construction there may be issues with supply of fixtures and fittings (not in stock or not in the market) or building areas may vary due to varying building requirements during construction of the building.
2. Check the Sunset Date
A sunset date is the day by which the developer is obligated to fulfil its obligation to deliver title to the unit to the purchaser as stipulated in the contract.
The buyer ought to ensure the developer is obligated to hand over the keys to the dwelling before the date 3 and a half years from the contract date notwithstanding there are avenues for the developer to include a 5 and a half year sunset date under the contract.
Short sunset dates bring a developer performance risk but for buyers, they can be certain that they are acquiring a property in a similar market (as between the date they executed the contract and the date of the delivery of unit). This ensures both less cyclical market risk and that delayed periods don’t impact on the value of their dwelling settlement.
3. Development Facilities
If a buyer is acquiring their dwelling as a result of the represented community title scheme facilities (pools, barbeques etc.), the buyer should ensure that the developer is bound to construct those facilities as represented by settlement date.
4. Exclusive Use Areas
The developer should be obligated to grant buyers with any exclusive use rights, such as car park areas and storage areas, at settlement. So that the buyer’s rights are attached to their lot and registered in the community management statement over the development at settlement, not a later period.
Considering buying off the plan? Contact us today.