Legal checklist for buying off the plan
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It may herald promises of being shiny and new, but buying property off the plan can be a legal minefield that deserves thorough research before you sign on the dotted line.

Here are some points to consider if you’re thinking about an off-the-plan purchase.


First and foremost, put your detective’s hat on and conduct due diligence.

Louise Hethorn, principal solicitor at Your Property Lawyers, suggests undertaking comprehensive research into the history of the developer and their other recent projects before committing on an off-the-plan property purchase.

It’s also worth checking the planning certificate to confirm the zoning and any restrictions that may impact the use of the property.

As well, check for evidence of home builder’s insurance cover.

Work with a solicitor or conveyancer

Experts recommend engaging a solicitor or conveyancer to carefully review any contracts before signing.

“An off-the-plan contract is complex, and purchasers need to know their rights and obligations,” Ms Hethorn said.

Different states have different clauses and rules so it’s important to be across these. For example, in New South Wales purchasers can pull out of the contract during the 10-business day cooling-off period and forfeit 0.25% of the deposit paid.


The contract is effectively the blueprint of the deal between the buyer and the developer or builder, so it’s important to ensure it includes all the relevant information.

Take note of the “sunset date” and other conditional events. For example, sometimes the contract may become conditional when the developer obtains finance for construction.

Make sure you take time to carefully review all the inclusions and warranties included in your contract. Buying a property is a big financial commitment so it’s important you get it right. Ensure the proposed schedule of finishes includes all inclusions and you have made your selections.

“Purchasers need to be aware of the defect period under the contract to give written notification of any defects in the property,” Ms Hethorn said.

“Often purchasers have 90 days from the date of settlement to provide the developer with one list of any defects requiring rectification.”


Under the contract, the standard deposit amount is 10% of the purchase price and deposit funds must be held in the deposit holder’s trust account during the contract period.

“The purchaser’s tax file number should be provided to the deposit holder for their portion of any interest earned during the period between exchange of contracts and settlement of the purchase,” Ms Hethorn said.


It’s wise to check the contract for clarification about any potential obligation for the purchaser to process the residential withholding GST payment as well as if the contract is marked with land tax as “adjustable”.

“If land tax is adjustable under the contract, the purchaser is required to pay a portion of a nominated amount for the vendor’s land tax. Check that the primary obligation for payment of land tax remains with vendor,” Ms Hethorn said.

Stamp duty also applies to off-the-plan purchases and will differ from state to state. In NSW, purchasers have 12 months from the date contracts are exchanged to pay stamp duty if they intend to live in the property. Otherwise, stamp duty is due three months from the contract date for an investment purchase.

Some buyers may be eligible for concession schemes or grants that reduce stamp duty.

Late completion penalties

Check the contract for penalties that apply for delayed settlement without the fault of the vendor and seek a reduction if there are high interest rates compared to current market rates. Purchasers have 21 days to settle from the date notice of registration of the strata plan is received.

Draft strata plans

It’s prudent for the purchaser to review the location and size of the apartment as well as car parking bays and storage rooms, if included.

“In most off-the-plan contracts, any variations resulting in the final lot size being reduced by more than 5% would give the purchaser a right to rescind the contract,” Ms Hethorn said.

It’s also advisable to assess the draft strata by-laws and draft strata management statement.


Off-the-plan developments can often take two to three years to be completed from the time contracts are exchanged. And during this time, a buyer’s income or borrowing capacity may change.

“As the property market fluctuates, bank lending policies and the valuation of the completed unit may result in reduced borrowing capacity,” Ms Hethorn said.

“If a purchaser is unable to obtain finance for settlement, they will need to onsell the property to avoid forfeiting the deposit paid under the contract. However, there may be a clause in the contract preventing or restricting a purchaser’s ability to onsell the property.”


“When a purchaser requires loan funds to purchase off-the-plan property, they need to understand that lenders can reduce the loan to value ratio for developments with over 30 apartments,” Ms Hethorn warned.

“The same applies to certain high-density postcode areas, so check finances with your broker or lender prior to expiry of the cooling-off period.”




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