Some property purchases are “off-the-plan” purchases. These purchases are different than a standard purchase in a few ways.
Generally speaking however, an “off-the-plan” purchase means purchasing land or an apartment that does not currently exist. The idea is that the vendor – typically a developer – intends to build a number of houses or apartments on the property and then to subdivide the land, allowing the vendor to sell those houses or apartments to prospective purchasers.
An “off-the-plan” purchase can be thought of as a “promise” that in the future, a separate and distinct parcel of land will be available to be transferred to the purchaser. There are no inspections that can be made and unfortunately the display home does not necessarily show what the final product would look like.
A typical “off-the-plan” contract will include a draft plan by the vendor showing how the subdivision would look like. It would also include a “sunset date”, or a time limit, of when the vendor must complete the works and the subdivision. This time limit is typically within 15 months to 3 years. The contract would also contain clauses that say that if these conditions are not met the purchasers can cancel the contract and recover any deposits paid.
Because of the nature of an”off-the-plan” purchase, it is difficult to predict when settlement is to occur. Due to this there is some level of uncertainty – at least when it comes to timing – when it comes to “off-the-plan” purchase.
Every contract is different, however a typical “off-the-plan” contract will contain provisions in relation to any changes in the plans, or where building work is part of the contract, a defects warranty period.
In the end, due to the differences between an “off-the-plan” purchase and a standard contract, you do need to consider whether an “off-the-plan” purchase is suitable for you.
If you have any questions, please don’t hesitate to contact us or drop us an e-mail through the quick enquiry form!