I'm eager to buy a property off the plan but I am wary about the risks involved. How am I protected?

Get in touch: 1800 770 780

How can we help?

For many, buying a home is an exciting realisation of a long-standing dream. While most purchases are of homes, townhouses or apartments that are already in existence, some people do opt to purchase new residences that have not yet been built, hence, buying off the plan. Contractors and developers for these types of homes often offer the buyer architectural plans, drawings of the exterior and finishing options for a buyer to view or choose from for their new home. However, oftentimes no actual structure is available for viewing prior to making the purchase. While there are inherent risks in deciding to take this route, there are also new protections and wonderful options available to buyers who purchase off the plan.

In 2018 the new Conveyancing Legislation Amendment Act 2018 was introduced to put into place greater protections for buyers who choose to buy off the plan. The Act imparted new disclosure requirements upon contractors and builders, giving buyers more protection from construction defects, material changes and reasonable completion time frames.

Initially, the Act requires the following:

  1. Greater disclosure to buyers
  2.  The ability to more easily rescind a contract that has been materially altered

Greater disclosure to buyers now includes the right to the following documents and/or information:

  • Disclosure statement
  • Draft plan
  • Ongoing revealing of any of the following changes;
    • A change to the drafted plan for the home
    • An accurate statement of the property by-laws
    • The addition or removal of a property easement or covenant
    • Changes to the completion of the chosen finishes for the home
    • Any additional matter prescribed by legislation

The standard that is expected to be applied in determining if the property finally delivered is within the confines of the contract is an objective one. Hence, if it is found that any of the changes made by the developer or contractor rise to the level of impeding the reasonable use and enjoyment of the agreed-upon property, the buyer is likely to have a claim for rescission of the contract.

However, there will be some obligations on the part of the buyer. 

If, in the event that the buyer receives the required notice from the developer that changes are being made or receives from the developer a registered plan of changes, and the buyer determines that the changes are material, the buyer must give notice of dissatisfaction and their desire to rescind the contract within 14 days of receiving either form of notice of changes. In addition, the changes must rise to the level of placing the buyer in a situation that, if known at the time of the original purchase, would have reasonably caused him/her not to purchase the property. If the buyer does not give proper notice, the buyer will be deemed to acquiesce to the noticed alterations.

In addition, before purchasing off the plan the buyer may wish to investigate the following:

  1. The proposed building site and surrounding neighbourhoods
  2. View any model homes that may be available for visiting
  3. Carefully research the home/property values to determine if the contracted-for price is within the range for the area
  4. Investigate the reputation of the developer

The buyer should also sit down the developer or their real-estate representative and ask the following questions:

  1. The time frame for building work; estimated beginning to completion dates
  2. The available choices relating to the bathroom finishing options and kitchen fixtures, paint colours, flooring options etc.
  3. A thorough review of the financing options for the home including deposits, refunds, changes to fixtures or finishes and the ensuing cost thereof
  4. Place in writing any changes or expectations that differ from the standard contract offered by the developer

Take the time to consider the risks of building off-plan too. Some risks include; a loss in property value by the time the construction is completed, structural quality that does not meet your expectations, changes that are made but are not considered material enough to allow for rescission (such as small changes to doorknobs, kitchen fixtures, neutral colors, carpeting or other minor flooring changes), and delays in completing the construction. All of these risk factors are possible when waiting for an off the plan home to be finished and move-in ready. If you are flexible and willing to take in stride short delays or small changes, or altered expectations, then this might be the perfect chance to be creative and to make a home your own.

However, as with all property purchases, it is important to enlist the aid of various professionals as you move through the process. Take the time to speak with realtors who are familiar with the area, investigate with local law enforcement regarding the safety and value of the properties in the neighbourhood, ask neighbours and friends about the reputation of the schools in the area and have all of your contracts reviewed by a solicitor prior to signing.

If you find yourself in need of assistance with this or any other legal issue, please contact the law offices of Owen Hodge Lawyers. At Owen Hodge, we are always happy to assist clients in understanding the full ramifications of any and all of your legal needs. Please feel free to call us at your earliest convenience to schedule a consultation at 1800 770 780.

Just ask us a question

We are always ready to help you.