Off-the-Plan Contracts

Off-the-Plan Contracts

We act for both purchasers and vendor developers We get “off-the-plan” sales. We understand the legal aspects – and frankly many of the practical aspects of this process.

Purchasing Off-The-Plan

For Purchasers, we provide pre-contractual advice to give a full summary of what is in the Contract and what it all means.

While Off-the-Plan can be an excellent purchase model, there are risks also.

Off-the-Plan Advantages and Disadvantages

Advantages of buying off-the-plan include:

  • Stamp duty savings – There can be significant stamp duty savings depending upon which stage of the development you purchase.
  • Off-the-plan properties can increase in value – Many purchasers have experienced increases in value between the day they signed the Contract and what the property is worth at settlement. However, there is no guarantee that this will occur, as markets can rise or fall.

Unfortunately, potential disadvantages also exist:

  • The Property may decrease in value – Smart pre-contractual advice can result in some protective mechanisms being put in place to protect you in such circumstances. Otherwise, you may need to find further funds to settle on the property than you anticipated and be effectively overpaying for the property.
  • The property you thought you purchased is not delivered – When this happens, there are avenues available to you to provide assistance. Our comments below are designed to assist if you are in this category.

After the glossy brochure has long been filed away (which will have limited if any effect in enforcing your legal rights), you will have a Contract of Sale that will dictate what the vendor developer is required to deliver to you.

When can a Purchaser Avoid the Contract?

We are frequently approached by Purchasers who have felt that the final product delivered to them is not at all what they had been promised. Unbeknown to many , the law will allow purchasers to “walk” from a Contract in particular circumstances – in other words to “avoid” the Contract and receive the deposit back in full if the developer has deviated sufficiently from the Contract. It happens often.

Avoiding the Contract – “Material” Changes

A little understood area is the developer’s responsibility to advise of changes to the plan of subdivision. This often arises because an external authority requires certain changes – or simply because the developer wants to amend the plan of subdivision for their own reasons. It does not really matter as to why – the critical issue is that if there is a change, your legal representative needs to be notified.

Section 9AC(1) states:

If after a prescribed contract has been entered into and before the registration of the relevant plan of subdivision an amendment to the plan is required by the Registrar or requested by the vendor, the vendor shall within 14 days after the receipt of the requirement of the Registrar or the making of the request by the vendor (as the case requires) advise the purchaser in writing of the proposed amendment.

There is a clear duty to advise a purchaser of the amendment.

Section 9AC(2) states:

The purchaser may rescind a prescribed contract of sale within 14 days after being advised by the vendor under subsection (1) of an amendment to the plan of subdivision which will materially affect the lot to which the contract relates.

Once notified, your legal representative should provide you with an opportunity to review the changes and advise you whether the changes give you a right to rescind (whether or not you want to).

This process may happen only upon the registered plan being provided to the Purchaser or, in most cases, their legal representative. This may also happen multiple times before a plan is registered – i.e. the plan of subdivision may have been updated many times – and a purchaser ought to properly be notified every time there is an update.

What Changes Can Affect the Contract?

Some common changes that can “materially” affect a lot (property) and give you the right to rescind your Contract include:

1. Changes to the size of your unit
2. Changes to the lot liability / entitlement of the common property
3. The removal of a storage cage

Not all alterations are “material”. There are degrees, but quite often there are changes that may seem subtle but nevertheless give rise to the right to rescind the Contract and have your deposit refunded in full.

We have also seen developers write directly to the buyers about changes to the plan of subdivision, instead of via their lawyers. This is not smart and hardly the best practice – and we have challenged this approach before with success.

Once you (if self-acting) or your legal representative has been notified of the changes to the plan, you must rescind within the 14 day time frame if the changes are “material” – so time is of the essence. If you miss the deadline, your rights are lost. You may have other legal rights, but these are more difficult and take longer to enforce.

The Importance of Hiring an Experienced Contract Lawyer

Legal practitioners need to be aware of their responsibilities in this area. They have a duty of care to the client to carefully inspect every plan of subdivision provided (whether or not the vendor’s lawyers have advised or identified the changes) and appropriately advise their client.

PCL Lawyers have considerable experience in this area. If you think the plan in your Contract has been amended, contact us to obtain urgent advice in relation to your situation. Remember, you only have 14 days from the date of the notice being given.

If you think your conveyanceror solicitor has missed the critical deadline and has not advised you of your rights correctly, you will have a right of recourse if there has been professional negligence. They may also be scope to still avoid the Contract on other grounds.

There are also other ways a purchaser can avoid a Contract, and they are often not obvious. We regularly advise clients about their contractual rights. We also accept referrals from other practitioners and conveyancers to provide advice in relation to alterations in plans of subdivision.

Call us to discuss your Contract of Sale questions on 1300 907 335, or simply fill in the enquiry form on this page and we will respond to you promptly.

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