Buying Off The Plan
Your comprehensive guide to buying
residential or investment property
off the plan.
For more information on your personal needs please call or email:
P: +61 7 3358 2399 І E: info@lawstore.com.au
Table of Contents
Overview to buying “Off the Plan” ….3
Standard forms and due diligence….4
Community Living ..….……………………5
Deposits…………….………………..……….6
Finance…………….………………….………7
Sunset clauses and cooling off
periods………….……………………..……8
Why choose
Conveyancing Queensland?...........9
An Overview:
Buying “Off The Plan”
Buying a property “off the plan” is the purchase of a property which is
either not fully constructed or for which construction has yet to
commence. It derives its name from the fact that the only detail you
have of the property is obtained from the marketer’s glossy brochures
or “off the (proposed) plan” which is intended will be registered when
the project is completed.
Buying “Off the Plan” is a popular way to invest in residential property in
Queensland. Purchasers can lock in a purchase price for their new
home or investment property months, or even years, prior to completion
of the property.
There are a number of advantages for purchasing a property in this manner
as not only are you purchasing a brand new property, but you often
have the opportunity to customise it to your own specific requirements
and you can potentially benefit from any capital gains generated during
construction, i.e. paying current market price for a property that will be
worth more when completed in the future.
“
customise it to your own
specific requirements
”
Quality Conveyancing – Done Right!
An Overview:
Buying “Off The Plan” cont...
An additional benefit is that a long
settlement phase also allows
the buyer time to realise assets
or raise the finance needed to
complete the purchase in an
ordered manner and without
pressure of an imminent
settlement date.
“
the building, fittings
and fixtures can be
depreciated and at
better rates than for
older or “pre-owned”
properties
”
Buyers intending to purchase a new
property as an investment,
generally qualify for
depreciation allowances as the
building, fittings and fixtures
can be depreciated and at
better rates than for older or
“pre-owned” properties.
For information on the depreciation
advantages available to
property investors, contact your
accountant or quantity surveyor.
.
Quality Conveyancing – Done Right!
Standard forms and
Due diligence
Due to the complexity of describing the
property and the requirements of
consumer protection legislation, the
Standard Law Society/ REIQ contract is
not suitable for “Off the Plan”
purchases. Developers therefore
create separate contracts with each
development they undertake. These
contracts, whilst following the same
general format, are all different and
can even show variances between
different developments undertaken by
the same developer.
It is therefore essential that these
contracts be checked by your Solicitor
and that you receive suitable advice
before entering into them. If you are
uncertain in any way about the
contents of the documents you can
request the insertion of a clause
stating that the contract is subject to
your carrying out further enquiries and
the approval of your Solicitor of the
contract. This is referred to as a “Due
diligence” clause.
“
It is therefore
essential that
these contracts be
checked by your
Solicitor
”
Quality Conveyancing – Done Right!
Standard forms and
Due diligence cont...
There are a number of risks associated with buying a lot which does not
exist at the time of contract. In particular:representations about the
lot (area, location, view) cannot generally be confirmed until the
building is constructed. This means that there could be changes to
the floor plan, size and configuration of the lot. The contract will
usually contain a right for the Developer to make minor alterations to
the lot and building in order to comply with local government
requirements or commercial exigencies. These changes may not only
affect your unit directly but may also have an impact on traffic flow,
views, light,positions of carparks and storage areas etc.
These changes are not always evident or quantifiable until the project
nears completion and thus any rights you have to rescind the contract
may be a hollow victory. Suddenly you are back in the market looking
for a property, your deposit has been tied up for maybe 12 to 18
months and it is highly unlikely that you will have a right to damages.
It is unusual for a buyer to be able to
terminate their contract at, or
prior to settlement, unless the lot
is substantially different from that
“illustrated” in the original plans
(and disclosure material )
provided at the time of contract.
“
there could be changes
to the floor plan, size
and configuration of
the lot
.
Quality Conveyancing – Done Right!
”
Community
Living
As you will be buying off the plan,
you will be buying into a
complex with other people all
living within the confines of the
development area. To enable
Residents to live in harmony
requires rules and regulations.
“
the CMS should also be
perused and approved
by your Solicitor
These are contained generically in legislation and also particularly for your
development in the CMS “Community Management Statement” for the
complex. This will contain such issues as whether you are allowed to
keep pets and the restrictions on use of common property such as
swimming pools gyms and saunas. For obvious reasons this should also
be perused and approved by your Solicitor
Quality Conveyancing – Done Right!
”
“
Deposits
Who receives the
benefit of the interest
from the deposit will
depend on the contract
The first step when entering into such a contract is that you will be asked to
declare your “Expression of Interest” prior to receiving the sales
documents for the real estate. This is a simple form which you complete
with the purchaser’s name/address and other details. Often you will be
asked for an initial or “Holding deposit”. This will usually be a nominal
amount of one or two thousand dollars. This initial deposit is fully
refundable if you find that you are unable to proceed past this stage.
Please ensure that this is being paid to a Solicitor’s or real estate
agent’s statutory trust account.
Later (often upon signing the full contract or at least when your finance is
approved) you will be asked for the balance of deposit. The amount of
this will depend on the development and the market conditions at the
time, but will traditionally be set at 10%.
As the project will take a long time, the deposits are placed on deposit until
settlement. Who receives the benefit of the interest from the deposit
will depend on the contract and it is therefore imperative that you or
your Solicitor check this.
Deposits can also sometimes be paid by way of Bank deposit bond or
guarantee. Banks issue deposit bonds for a fee and will often ask for
security. You will need to check if issuing a bond is commercially
advantageous, sometimes the costs involved are more than the interest
earned..
Quality Conveyancing – Done Right!
”
Finance
No bank or financial institution will grant finance unconditionally 18
months out on the security of the investment alone. Finance will
generally be granted subject to:
“

valuation ( done upon application for the finance but obviously
confirmed upon completion of the development)

the Banks ( and they all have them) “Non Material changes” clause.
This is a clause not in the purchase contract but in the loan agreement
with your financier stating that if there is any change to your financial
position between conditional finance and settlement the bank reserves
the right to refuse to finance. This obviously could include such things
as death, divorce and redundancy which could be totally outside your
control. You will however, be asked to declare “unconditional” on the
contract long before this. The only way to ensure that you are covered
for this is to effect suitable insurance.
No bank or financial institution will
grant finance unconditionally 18
months out on the security of the
investment alone
”
Quality Conveyancing – Done Right!
Sunset clauses and
cooling off periods
It is also important to note that in all development contracts there is a
sunset clause which will allow the Vendor to rescind the contract . This
is normally a specified date set a year or more in the future. It allows
the Developer to have you commited to the purchase whilst allowing
him an escape if he can not raise sufficient funding to construct or if
the project for any reason becomes commercially unviable. You
normally will receive your deposit back but may not necessarily recieve
any interest on it . (see my comments on Deposits)
The “cooling off” periods were established under the PAMDA Legislation to
allow buyers to extract themselves from a contract should they suffer a
bit of “buyers remorse. The period in general terms ends within 5
business days of signing the contract. Exercise of this clause may cost
you financial penalties ( 0.25% of the contract price) and it is usually
preferable to exersise any option you may have available under the
finance clause or under your Solicitors due diligence clause if you have
managed to have one inserted ( see previous comments). You need to
realise that the end of any cooling off periods may be 6 months or more
before the developer even commences construction. There is no
additional cooling off period once the lot is registered.
“
in all development contracts there is
a sunset clause which will allow the
Vendor to rescind the contract
”
Quality Conveyancing – Done Right!
Sunset clauses and
cooling off periods cont…
“
If you are considering purchasing a
property off the plan,
be sure to obtain advice from your
Solicitor.
”
Settlement will traditionally occur 14 days after the registration of the
appropriate plans and CMS (Community Management Statement) with
the Titles office. The actual date that the plan registers is always
uncertain but when it does, the race is on to obtain all necessary
searches and ensure that the property that you envisaged buying 18
months ago is what is finally being delivered to you.
In Queensland the building industry is heavily regulated for the protection
of consumers. This includes such things as the transfer of consumer
warranties; Body corporate Insurances; registers of common assets;
disclosure of management and service agreements; five year sinking
fund budgets and forecasts and many other issues too involved to
elucidate on in this broadsheet.
The best advice that we can give you is …
If you are considering purchasing a property off the plan,
be sure to obtain advice from your Solicitor.
Quality Conveyancing – Done Right!
Why Choose
Conveyancing Queensland?
 More than 30 years experience.
 Servicing individuals and
businesses.
 Trusted advice in all areas of
property law.
 Clients live locally, nationally and
internationally
 Capable of handling complex cases
and unique buying or selling
scenarios.
The LawStore Group of firms will take
care of you and your conveyancing
needs and will “do it right”.
Quality Conveyancing – Done Right!
The LawStore Group
Incorporating
Q Solicitors www.qsolicitors.com.au
Conveyancing Queensland www.conveyancingqueensland.com.au
Lang Hemming & Hall www.langhemming.com.au
MGM Solicitors www.mgmsolicitors.com.au
• Buying
• Selling
• Business Services
• Personal Services
www.conveyancingqueensland.com.au
+61 7 3358 2399
Quality Conveyancing – Done Right!