Conveyancing for a new build project is vastly different to purchasing an existing property. To ensure that there are no settlement delays or unexpected costs, a specialised and experienced lawyer is recommended.
Below are some of the main points to consider:
Contract Of Sale
This is the most important document when buying off the plan property because what you are about to purchase has not yet been built. You need to make sure that you get what you pay for.
The contract of sale needs to be reviewed very carefully to make sure that it correctly matches, in writing, what the developer has promised you. The contract of sale must contain a comprehensive schedule of fittings, finishes, and fixtures.
These outline what is included and are generally listed briefly in the contract. In many cases, there will be a clause stating that the developer reserves the right to replace the stated inclusions with ones of a similar quality should the originals not be available.
With many off-the-plan projects, the package includes design customisations such as finishes, colours, appliances, fittings and fixtures.
It is imperative that you check carefully for warranties and inclusions, making sure that you are protected from any unjustified changes that the developer may make.
The contract will have allowances for the developer to make changes to the build. For example, minor changes may need to be made to the plans because of a council planning requirements. There should be a provision in the contract to allow the purchaser to cancel the agreement should these changes significantly affect the property.
Your legal rights
Ensure you have a sound grasp of your legal rights when purchasing off the plan. As an example, what can you legally do if the construction is delayed significantly? Can you pull out from the contract? What are the costs and conditions if you do so?
Your Options for Deposit
The standard in Australia is for you to pay a deposit of 10%. It is a legal obligation for the deposit to be retained in a legislated Trust account and invested until settlement has been reached.
Your lawyer can check what Stamp Duty commitments you may have. In many cases, you can be eligible for concessions and/or grants such as the First Home Buyers Grant. Victoria has generous stamp duty savings for off the plan projects when the build has not yet started.
You will need to consider the purchase as either a Joint Proprietors or as Tenants-in-Common, if you buying with someone else (partner, family etc.). This is a really important part of the process because what you decide on will affect what happens to your portion of the investment if you pass away. If you are unsure about the structure, you can add in an “and/or nominees” clause which gives you flexibility and time. You may be charged Government Stamp Duty twice if you don’t have this clause and you change the ownership structure – they assume the property has transacted twice).
There are many factors that you have to be aware of. We haven’t gone into detail with them all. Below is a list of some other points that you should speak to your lawyer about:
- Owners’ Corporation
- Proposed Plans & Floor Plans
- Finance and pre-approvals
- Cooling off period
As you can see, there are many legal implications and scenarios that need to be accounted for. We hear time and time again how painful, time-consuming, and expensive the conveyancing process was. That is why Titlexchange recommends using a law firm that has an online platform for settlement . If not, the alternative is a conveyancing clerk that will not be able to advise on all of the factors we have mentioned which increases settlement delays and the fees you have to pay. Find out more about Titlexchange’s transparent and competitive pricing for off-the-plan, house and title transfers.