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What is buying off the plan and what are some of the risks?

What is buying off the plan and what are some of the risks?

Thinking of buying of the plan?. buying off the plan

Buying a property can be a confusing process, even more so when it involves an off the plan contract. So what is buying off the plan and what are the things to look out for?

If you are purchasing a property off the plan, it means you are buying a residential property that has not been built when you have signed the contract. For example, you might be purchasing an apartment in a building that is yet to be constructed because you think it will make a good investment in the future.

As with purchasing any new home, unforeseen problems can arise when buying an off the plan property. For example, the Seller (known as the “Vendor”) might have issues with financing the project, which could cause delays in the construction of the building.

In these circumstances the Vendor may seek to extend what is called the “sunset date”. A “sunset date” clause is a typical clause in an off the plan contract, with the “sunset date” being the date that the development must be completed.

The Vendor may have the option to extend the sunset date. If this happens, the construction of the building and settlement of the contract can be drawn out and, if it is extended more than once, effectively it can be indefinitely postponed.

New laws were introduced in relation to off the plan contracts in New South Wales last year, being the Conveyancing Legislation Amendment Act 2018 and Conveyancing (Sale of Land) Amendment Regulation 2019 (https://www.legislation.nsw.gov.au/view/pdf/asmade/sl-2019-514) , to help protect the rights of purchasers. However, these laws have not resolved all the issues associated with buying off the plan.

Purchasers should be aware of the risks and consult a Solicitor before entering an off the plan contract. If you would like advice about this, please do not hesitate to contact our Conveyancing Team at Brazel Moore Lawyers on (02) 4324 7699.

Leading law firms committed to helping clients cost-effectively will have a range of fixed- priced Initial Consultations to suit most people’s needs in quickly learning what their options are. At Brazel Moore we have an experienced team who can answer your questions and put you on the right track.

 

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