Buying an off-the-plan property can be an enticing prospect, especially when you take the Victorian government’s stamp duty concessions into account. And, as the first owner of a property, you won’t have the worry of unexpected repair bills or ongoing maintenance costs blowing a hole in your budget in the near future.
But who is involved in a typical off-the-plan sales process? Let’s find out:
The property developer
Long before you entered the scene, the property developer would’ve likely had a busy few years getting their development off the ground, including:
- Finding and purchasing suitable land
- Conducting a feasibility analysis
- Working with an architect to come up with a design
- Getting planning approval for the development
- Arranging finance for the project
- Developing marketing materials
Typically, construction only starts when several properties have been sold first. This helps gauge likely demand for the development and is often a condition of their financing.
However, the downside of this back-to-front process is the risk the developer goes bust before the build is complete. As such, the first rule of buying off-the-plan is to do your homework on the developer and builder before you commit.
You want a reputable developer with a solid track record, so:
- Visit recent developments they’ve completed
- Ask for reviews or testimonials from previous clients
- Compare old marketing materials with reality – so you can be confident the developer delivers on their promises
The sales agent
In an ideal world, the developer will sell all the off-the-plan properties before construction finishes.
To help achieve this, they’ll bring in sales agents tasked with building hype around the project and selling as many properties as possible. The sales agents will be armed with marketing materials including floor plans, videos, brochures, renders and mood boards to show prospective buyers. There will also likely be a fancy website, display suite, a launch event and paid advertising across the major property portals.
Many sales agents are experts at selling the dream, making it sound like the development is an ideal opportunity whether you’re an owner-occupier or investor. However, remember who they work for … and it’s not you! So always take their claims with a pinch of salt, and research the local property market before you sign on any dotted line.
And, if their claims sound too good to be true or you’ve found out about the development via a ‘wealth creation’ seminar, beware you’re not being misled by a spruiker. Property spruikers are unscrupulous individuals who want to make a quick buck at your expense.
To reserve an off-the-plan property, you need to pay a deposit and sign a sales contract. The contract will have been drafted by a commercial lawyer and will likely contain clauses that favour the developer. These often give them the right to alter their plans and terminate the contract if the property has not been completed within a certain timeframe (known as the sunset clause).
Many off-the-plan disputes arise from ambiguous contract terms, particularly when it comes to the quality of fixtures and fittings. As such, always thoroughly review the contract before signing, ideally with the help of an expert off-the-plan conveyancer like Sutton Laurence King. They can draw your attention to any nasty surprises hidden in the legal jargon so you know exactly what you’re getting into before it’s too late.
Rhiannon Leonard is a lawyer who assists clients with off the plan and SMSF conveyancing.
Get the right advice by speaking with Sutton Laurence King Lawyers. Call us on 03 9070 9810 or email us on firstname.lastname@example.org
Sutton Laurence King Lawyers articles are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought based on your transaction and personal circumstances. Persons listed may not be admitted in all States and Territories.