- More details to be disclosed in the contract
Developers will need to attach a ‘Disclosure Statement’ to the off-the-plan contract, which would include a draft plan by a registered surveyor, proposed lot number and location, draft floorplans, community plans, schedule of finishes and draft-by laws among other details.
- Buyers notified of any ‘material changes’ – and buyers can rescind or claim compensation for some changes
If the end product differs in ‘material particulars’ that would adversely affect the use or enjoyment of the property, vendors must notify buyers. ‘Material particulars’ includes changes to the draft plan, by-laws, schedule of finishes and others.
Buyers could be able to rescind the contract if they can show that they would not have entered into the contract had they been aware of the change, and that they are materially prejudiced by the change. Or they could claim compensation – up to 2% of the purchase price.
- Double cooling off period
The new laws double the cooling off period for off-the-plan contracts from 5 business days to 10 business days.
- Purchasers given 21 days to review the final registered plan
Developers must provide buyers with a copy of the final registered plan at least 21 days before settlement. If the plan reveals any inaccuracy in material particulars which the developer has not notified the buyer, then buyers may seek to rescind or claim compensation with 14 days of being served the registered documents.
- Deposit to be held in trust
Any money paid by the buyer under the contract – e.g. a deposit or instalment will be placed in a trust and not released to the vendor before settlement. This will ensure these funds are protected in the event of the developer’s insolvency.
- Stronger sunset clause protections
Sunset clauses allow either party to terminate an off-the-plan contract should a certain event, like the registration of the plan, not occur by a specified date.
The new laws now extend the definition of a sunset clause to capture other events which trigger termination of the contract, like the issue of an occupation certificate. Changes also confirm that the Court can award damages if the vendor is permitted to end the contract under a sunset clause.
Buying a house, apartment or townhouse ‘off-the-plan’ means signing a contract to buy a property that is yet to be built. You can view the developer’s plans, designs and renders for the property, but can’t view a physical building.
Typically, purchasers pay an initial 10% deposit, with the balance of funds not due until construction is completed. Construction time varies, it could be only a few months or some years – with houses generally completing faster, and apartments taking longer.
See also: Ironfish guide to buying off-the-plan
For further details about the new contract changes, please visit: NSW Registrar General
To learn more about the Ironfish selection and off-the-plan due diligence process, view: How we select properties