A headline in Sydney’s major broadsheet newspaper today succinctly declares “Off-the-plan unit sales run hot”.
If you’re considering taking advantage of buying a property “off the plan, It’s probably timely to take a deep breath, not get caught up in any hype, and just recall some of the pitfalls that can and do occur.
One claimed benefit of buying off the plan is that some consider it a good opportunity to purchase at a price that is more likely to be considered a bargain when the property is eventually developed and the purchase completed. The time from contract date to completion often won’t take place for several months, if not a year, or two, or three!
So what are what are some potential issues?
The completion date – how does the contract define it. More importantly, what obligations, if any, are on the developer to comply, and how can it be extended. What rights does the buyer have to get of a deal that keeps getting delayed? Can you as buyer get stuck with a deal that’s gone sour and delayed by years?
Do you know exactly what you’re getting? Really, do you? Is the quality of appliances comparable to those in the brochure or display unit? What about dimensions? What scope is there for variations between the dimensions in the contract and what ends up built? Can you end up being stuck buying a butter box rather than the penthouse you expected? Are the tennis courts and swimming pool part of a later stage, one that may take years to develop, if ever?
Don’t forget your deposit bond. These have expiry dates. A buyer can unintentionally be in breach if the bond expires, because of continued delays.
Then, of course, there are building defects - how are these defined; what obligations are on the developer and the buyer?
Lots of questions, but few answers I’m afraid. These are all real issues that do arise, and often in off the plan purchases. Sure, they can arise in any property purchase, but buying off the plan is something akin to buying vapourware.
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