If you are purchasing an off-the-plan residential property it is prudent to obtain proper advice on the Contract so you are aware of your rights under the Contract. This minimises the chances of nasty, and potentially expensive, surprises. Below is a summary of the more contentious conditions that a Purchaser should be aware of prior to proceeding to an exchange of Contracts:
- Cooling off period In New South Wales, you are entitled to a 10-day cooling off period for a residential off-the- plan Contract. Please note the extended cooling off period does not apply to properties purchased at auction, or any properties that are deemed commercial.
- ”Sunset Date” The Contract will contain a sunset date, which is the date that the construction of the property must be finalised by, and that the draft plan must be registered by at the Lands Department. The developer will generally be entitled to extend the sunset date subject to certain criteria being satisfied.It is important that you are aware of the sunset date as the property may not be completed until the time immediately preceding the expiration of the sunset date. The sunset date can often be years after an exchange of Contracts.Further, your broker/banker should be aware of the sunset date for your finance approval as an extended sunset date may impact on your ability to obtain finance at the time of settlement.
- Settlement date The Contract will generally specify that completion will take place within a certain time frame following notification of registration of the plan and LSW Lawyers being served with a copy of the final occupation certificate, certificate of classification, or occupancy certificate.We recommend requesting a completion date of no less than 21 days from the satisfaction of the above, to allow your financer adequate time to complete a valuation of the property, issue mortgage documents to you to review and get signed, and to make arrangements to be ready for completion.
- Fixtures and fittings The developer will specify the fixtures and fittings that are contemplated to be installed in the property prior to completion. The Contract may also specify a colour palette that the property and the fixtures and fittings will be finished with.It is a usual condition of an off-the-plan Contract that the developer will be entitled to substitute fixtures and finishes if those exact fixtures and fittings are not available at the time of construction of the property.The Contract should contain a term that the fixtures and fittings will be of an equivalent quality and standard a to what is currently specified in the schedule of fixtures and fittings.
- By-laws The Contract will contain a document which sets out the draft by-laws for the strata scheme. The by-laws will govern the rules of the owners and residents who are part of the strata scheme, including things like the hanging of washing, the removal of waste, and the keeping of pets.
- Alterations to Plan The developer will be entitled to vary the size and layout of the property and/or the floor plan, which can include the amendment to the location of columns within the property. It is imperative that the developer’s ability to make amendments is limited to an acceptable standard.Please contact LSW lawyers so that we can discuss with you further the developer’s entitlement to make amendments to a property you may wish to purchase off-the-plan.
- Stamp Duty Stamp duty will be payable on the higher of the consideration as noted on the Contract or the market value of the property. If you contact LSW Lawyers we will be able to advise you if you are entitled to a deferral or discount of the payment of stamp duty.
- Additional advice We would recommend that you obtain finance approval and/or make enquiries with your accountant as to the financial viability of a property prior to proceeding to any purchase.Most fully professional law firms will be happy to have an initial discussion with you about your plans and the right steps to take going forward.