Buying an off-the-plan house in Victoria, Australia? Trust Select Legal to help you navigate the legal complexities & potential exposures in contracts that come with purchasing off the plan. Request your free quote today and let Select Legal protect your interests & giving you peace of mind.
To buy off-the-plan means to purchase a property that is either yet to be built or is currently under construction. As a buyer, you sign a contract to secure an apartment or home that is not yet complete. In this case, you make your purchasing decision based on building plans and designs rather than the finished product.
When deciding on a property without a physical property to view, you will have to rely on plans and drawings of the space for reference. It’s important to do your research on the builders and designers of the property and check out examples of their previous work.
One benefit of buying off-the-plan is that you’ll be the first person to live in the brand new home, giving you some control over its presentation. Additionally, off-the-plan properties may be eligible for financial incentives such as first home owner grants and stamp duty concessions, subject to state regulations. During the marketing phase, developers may also offer enticing benefits to the contract price.
One of the main advantages of purchasing property off-the-plan is the opportunity it offers buyers to acquire property at the current market price by paying a deposit, which is typically no more than 10% of the purchase price. The remaining balance is payable at settlement, which may occur at a future date.
This arrangement provides buyers with time to secure their finances and, if necessary, sell their existing property without the need for bridging finance. Developers may also offer discounted prices for some of the land or building units to meet sales targets or initiate construction. Furthermore, if the real estate market experiences growth, the value of the property purchased off-the-plan may appreciate by the settlement date.
One of the biggest drawbacks of purchasing off-the-plan is the risk of the development not proceeding within the agreed timeframe, or at all. There may be various reasons for this, such as the developer failing to obtain necessary approvals or secure sufficient funding. In such cases, the developer may choose to terminate the contract as permitted under its terms.
It’s important to be cautious of speculative developments, where the developer uses deposit funds to finance the land purchase or development itself. The deposit amount required in such instances may be significantly higher than usual, and there may be a risk of losing the deposit if the buyer waives their legal rights to it, enticed by a below-market purchase price.
While a contract typically provides for the return of the deposit if the development doesn’t proceed, it doesn’t usually provide for any other compensation. This means that, even if the deposit is refunded, the buyer may have missed out on purchasing elsewhere during a period of rising real estate prices.
Deposit funds can be held up for an extended period of time without any assurance of the development being completed. If the developer becomes insolvent, the buyer’s deposit may also be at risk unless measures are taken to safeguard the funds.
In the case of a contract for the purchase of a strata title or survey strata property, the deposit is usually required to be held in the trust account of a solicitor, real estate agent, or settlement agent until a strata/survey strata plan is registered with Landgate. Nonetheless, since there is no obligation for the money to remain in the trust account after the plan is registered, a developer may still be able to access the deposit unless a clause in the contract prevents this.
To protect a deposit, a contract must include a clause that requires the deposit to be kept in the trust account of a solicitor, real estate agent, or settlement agent, and prohibits the developer from accessing it until settlement. If the developer refuses to include this clause, the buyer should weigh the risk before proceeding with the transaction.
Although it is commonly assumed that the value of real estate properties always increases over time, there is a possibility that they may not appreciate during a development period or even decrease in value. It is important to acknowledge the risk that the price agreed upon in the contract for a property could exceed its market value at the time of settlement.
Banks and financial institutions may be less willing to lend money for buildings that are yet to be constructed or for strata properties that are below a minimum threshold size. Additionally, developers may not agree to a contract being subject to the buyer obtaining finance, as this could impact their own ability to obtain investment funding.
Even if a bank or financial institution considers a buyer fully qualified to borrow the required amount at the time of purchase, this may change in the future due to changes in lending policy, the buyer’s financial circumstances, or prevailing interest rates. If finance is essential but not included as a term of the contract, the buyer risks defaulting and may be liable to compensate the developer.
Select Legal’s off-the-plan conveyancing services and experience can bring much-needed clarity to the property transaction process, just like with any other property transactions.
By engaging an experienced conveyancer, you can receive expert advice before signing the contract and have a better understanding of the development you are investing in, especially when purchasing an apartment, unit, or townhouse off-the-plan.
There are many factors to consider, such as how the development is sub-divided, the number of lots involved, the Owners Corporation structure, initial fees, parking spaces, the architect and builder, and the building materials used, just to name a few.
Since the development is not yet built, it is essential to ask as many questions as possible to understand what you can expect from the eventual product.
Select Legal Conveyancing can help you answer these questions and provide guidance to ensure you make an informed decision. If you are confident with your off-the-plan purchase, Select Legal Conveyancing can assist you in signing the contract and keeping you updated throughout the project’s development.
As settlement approaches, Select Legal Conveyancing will provide ample notice to prepare for settlement.
Our property lawyers offer a competitive and straightforward fee for all our Conveyancing services whilst maintaining a high-level service.
To keep things simple, our fees are fixed in advance so that you know your conveyancing costs upfront and there are no surprises along the way.
When buying off the plan, you need to be aware of many potential legal issues.
We are a leading real estate law firms in Melbourne, with targeted experience in buying off the plan conveyancing and contracts. Our lawyers are highly experienced in advising clients on all aspects of property transactions, including lease agreements, sales contracts, purchase & sale agreements, construction contracts, project management, development projects, land acquisition, and more.
Contact Select Legal today for all your property needs or request a quote which will only take a few minutes.
Get A Free Quote
Fill out the form below to get your fixed fee quote within 24-hours.
Get A Free Quote
Fill out the form below to get your fixed fee quote within 24-hours.
When you choose Select Legal, you can rest assured that you’re working with the best in the business.
OTHER CONVEYANCERS
Our conveyancing-focused lawyers handle every detail of your settlement with care and precision, ensuring a stress-free experience. With our attention to detail & clear communication, your property transaction is in safe hands.
Get in touch & request your free quote. One of our experienced lawyers will then be in contact via. phone or email within 24-hours.
When we get in contact, we will ask you a few questions to understand your needs & provide a fixed-price quote for your conveyance.
If you would like to move forward with Select Legal, we’ll begin the process & take care of the heavy lifting while providing regular updates until finalisation.
Don’t just take our word for it, see what our clients have to say
Experience peace of mind with a personalised conveyancing service from a seasoned lawyer.
Select Legal
Level 1/13 Corporate Dr, Heatherton VIC 3202
Fill out this form to get a fixed-fee quote within 24 hours.
Conveyancing fees from $990*
***Prices Starting From $990 + GST + Disbursements***