Buying off-the-plan - what to look out for

Some people (including my grandfather) will not go anywhere near an off-the-plan purchase, not even with a sixty-foot barge pole! Others are seduced by the glossy developer magazines selling innovative designs in premier locations at a price that will never be repeated. Whether buying off-the-plan is or isn't your cup of tea, you should be aware of the legal issues involved.

Often with the large urban developments, the developer uses a large firm to draft the Contract and manage the property transactions on their behalf. What this can mean is that you have top-tier corporate/property lawyers drafting a watertight, one-sided Contract (complete with a number of volumes) with very little room for negotiation. (As a quick aside, if you come up against one of these Contracts, there may be scope to challenge them on the basis of unfair terms in the Australian Consumer Law. But rest assured, that would be an expensive and time consuming process.)

Here are some of the key things to look out for in Contract for an off-the-plan purchase:

• Rights to alter design/plan: The Contract will most likely give the Vendor a right to alter the design/plan if required (by Council etc). This is necessary as it is difficult to foresee what issues might arise in the development. However, there should also be a right for you to terminate the Contract (or be compensated etc) if the change in the design/plan disadvantages you.
• Rights to alter materials/fittings/finishes: As above. Different materials etc may need to be used by the Vendor (eg. if they are unavailable etc) but should you have some recourse if they are significantly different from what was planned originally.
• Sunset Date: How long does the Contract give the Vendor to finish the development (the sunset date)? Are they given the right to extend the sunset date? These are important issues to consider as you don't want to sign up for a development that keeps dragging on. 
• Land tax and other costs: Is the Vendor passing on significant costs to you as the purchaser? Such as land tax? 
• Strata and Community Schemes: Large developments are often structured by having individual buildings as their own strata schemes and then all the buildings are part of a larger strata scheme or community scheme. This can mean that each of the strata schemes (and thus you as part of the owners corporation) can have significant liabilities for the maintenance and upkeep of the community scheme property - private roads, pools, gyms, saunas, recreational facilities. 
• Other construction work: Has the Vendor disclosed that they intend on constructing other buildings right next to yours? This may mean that your idyllic harbour-side pad will take on a kind of jackhammer ambience!

There will be other issues that need to be considered as well. You should always obtain advice from a property lawyer for a Contract for Sale but this doubly applies for off-the-plan purchases. You need to know what you're getting into.

Jonathan Marquet
Emil Ford & Co. - Lawyers