“OFF THE PLAN” PURCHASE/SALE

This is where a purchaser and vendor enter into a contract to buy or sell property before a plan of subdivision has been registered. This type of sale usually involves apartment developments.

A purchaser benefits with substantial stamp duty savings, as the duty is calculated on the value of the property, that is, the land and any improvements as at the date of the contract. For a vendor, selling off the plan can assist to increase the capital base to enable the project to progress.

As the contract is usually signed before any construction starts on the site, the purchaser should be mindful that the completion date stated in the contract may not coincide with the actual completion date of the works. Delays in construction are sometimes inevitable.

A purchaser should keep in mind that:

– The vendor may need to alter and amend the original project plans, as some design or construction element may have emerged that was previously unknown.

– The purchaser is required to proceed to settlement within 14 days of being notified of the registration of the Plan of Subdivision.

– Postponement of settlement if a purchaser feels the unit is not ‘finished’ is not permitted and may result in a penalty payment to the vendor.

– Rectification of any recognised defects will usually occur after the settlement date. Under the Sale of Land Act 1962, before entering into a contract the vendor must give the purchaser certain documents to enable the purchaser to make a better informed decision on whether to proceed under contract. Therefore, all parties should fully discuss their aims and goals with their lawyer before buying or selling off the plan.

Our firm has many years experience in dealing with off the plan sales and we welcome the opportunity to assist with preparation of contracts for vendors or assist in purchases.