It is common for developers to restrict the on-sale of its off the plan products before it has completed settlement of all of its sales. An off the plan purchaser can make a request that the developer allow them to re-sell their lot. Purchaser’s should be aware though that this request may not always be granted. Developers have an interest in restricting on sales so they can have more control over the sale prices of its products.
What is the process for on-selling off the plan property?
Purchasers may have a number of reasons for wanting to on sell their off the plan purchase. Common reason are that over the course of the development, the price of the apartment has increased or conversely that they can no longer obtain the finance they need in order to settle on their contractual obligations.
Depending on the circumstances for the reason of the on sale will affect the method or process by which the on sale is effected.
Nominating an alternative or substitute purchaser is a common way of on-selling. Another method would be to enter in an on sale contract with your purchaser.
Process step 1
Check to see if your contract restricts the on-sale of your off the plan apartment.
If your contract does restrict on-sale, you should seek advice as to how we can assist in obtaining consent from the developer to allowing you to on-sell your off the plan apartment.
If not, or if you obtain consent to on-sell, you should seek our advice as to the most appropriate method of on-sale for your circumstances and having regard to your reason for selling.
Process step 2
Purchasers can also on-sell their off the plan apartment for more money than what you paid for it. One of the most important considerations they should take into account are that this method will attract stamp duty implications and before a purchaser sells their off the plan apartment this way, they should seek our advice as to these potential fiscal pit-falls.
Process step 3
Once a method is selected and the documents drawn and signed, then the next steps are to wait for the development to be completed and then proceed to settlement.
Can an off the plan property be sold before settlement?
Yes – subject to the developer providing consent (in most but not all cases).
What are the risks associated with selling off the plan?
Whilst not an exhaustive list, some of the risks associated with on-sales are that the Develop fails to complete the development but the on-sale contract with your purchaser is not conditional upon completion of the development; if done by nomination that you are still bound to complete the purchase in the event your purchaser cannot; and if sold for additional monies, stamp duty implications. We can assist to identify and limit the risks associated with on sale agreements.
What are the conveyancing cost for selling off the plan?
$900++ in Vic (with a contract review a further $400).