More of our top tips for negotiating and entering off the plan contracts
1. Defects. With respect to defects normally off the plan contracts will provide that the Developer has a certain amount of time to rectify any defects in the final construction upon being given notice by you the Purchaser of those defects. Where we see differences between an off the plan contract which is heavily weighted towards the Developer, as opposed to where rights are evenly distributed between the Developer and Purchaser, is the amount of time that you have to bring those defects to the Developer’s attention and also the amount of time that the Developer has to rectify those defects. That period of time can range anywhere from 14 days to 12 months. It is important that this particular clause provides for enough time for you to make a proper assessment of any defects which exist, after they have come to your attention, and that the Developer then has to rectify those defects within a reasonable time.
2. With respect to completion or sunset clause it is quite often that the Contract needs to be completed within a certain amount of time. That is to say, the Developer has a certain amount of time within which they must finish the project before the Purchaser receives a right to terminate the Contract at will. That period of time or that Sunset Date ranges and differs greatly from Contract to Contract. It is important to clarify what the sunset clause date is and when the build must be completed so that you are fully aware of your rights to terminate in the event you wish to do so.
3. Regarding the payment of the deposit; developers, for obvious reasons, will want their prospective purchasers to pay the full deposit as soon as possible. However given that the finished product may not be available for a long period of time, often years, it is typically advantageous for a purchaser to insist upon only an initial deposit being paid within the first stage of the project and then the balance deposit being paid at a later date, sometimes months later. This ensures that your financial assets are not tied up in a project which may not come to fruition for a long period of time, if at all.
4. Stamp duty is a relevant consideration. In Queensland stamp duty is typically payable on the purchase price within 30 days from the registration of your lot in the scheme or on settlement (whichever comes first). It is highly likely that you will need to pay stamp duty on the Contract prior to settlement. As stamp duty is often a significant sum, it is important to make sure you have sufficient liquidity to pay that stamp duty when it falls due.