An Off the Plan contract typically refers to transactions where a vendor (who acts as a developer) sells a property, prior to the commencement of construction. This is often termed ‘buying a property off the plan’. Off the Plan contracts are typically found in apartment developments, and new subdivisions most commonly in the form of house and land packages.
Purchasing with an off the plan contract can have many benefits, including savings in stamp duty, having a greater input into the design of the property and having the price fixed at the time of signing.
An off the plan contract does not have a specific or definite completion date. As a result, the off the plan purchase may take a significant amount of time to reach completion and then settlement. Even after the property is completed it may take even more time for the developer to obtain the title, and then transfer the legal ownership to you.
Most off the plan contracts stipulate that once a property becomes registered with Land Victoria, settlement must be completed within 14 days. If the property does not settle within this time, the purchaser will be required to pay penalty interest and may be issued with a default notice. The short settlement period often raises issues for purchasers with respect of their finance arrangements.
Purchaser’s may occasionally decide to terminate the off the plan contract and withdraw from the purchase. Given the time taken to reach completion, the purchaser’s financial position may change, their needs for property may change, or they may find a more attractive property which is already available.
As the off the plan contract is a legally binding contract, it is often very difficult for the purchaser to terminate. On some occasions we have found that a developer includes prohibited terms and conditions to discourage a purchaser from terminating the contract. It is often important to engage an experienced Property Lawyer to ensure that your off the plan contract does not include any prohibited or unfair terms which can often lead to a costly, time consuming and stressful dispute.
The limited circumstances in which a purchaser may terminate an off the plan contract may include:
Failure to comply with Sale of Land Act 1962 and Domestic Building Contract Act 1995;
Misleading and deceptive conduct in the sales process;
Changes or Variations to the building plans; and
Developers failing to complete construction before the ‘sunset date’.
If you require assistance with an off the plan contract, or would like to terminate your contract, the experienced Property Lawyers and Conveyancers at Kapadia and Gordon lawyers can intervene and ensure your rights are protected as both a vendor or a purchaser.
Please contact Kapadia and Gordon lawyers today on +61 402 52 6031 or via www.kapadialegal.com for more information.
This article is provided for the purposes of general information and is not legal advice. Please contact us directly for tailored specific legal advice.