Purchasing an off the plan property is a very different prospect compared to buying an established property.

Everything about the process is different. For starters, the property isn't even built when you agree to purchase.

Given the added complexity of purchasing an off the plan apartment, the contracts drawn up between developer are also more complex.

We've wrapped up the top seven things to look at when reviewing an off the plan contract.*

1.  What is an off the plan contract?

An off the plan contract is a contract between a buyer and developer for the purchase of a property that has not yet been built. The contract sets out the terms and conditions of the sale, including the price, deposit amount, settlement date, and any special conditions that apply.

2.  Why is off the plan property popular?

Off the plan property is popular because it offers buyers the opportunity to purchase a property at today's prices but settle at a later date when the property is completed. This can be advantageous for buyers as it allows them to lock in a price before construction costs increase.

3.  What should I look for in an off-the-plan contract?

When reviewing an off-the-plan contract, there are several things that you should look for:

- The price: Make sure that you're happy with the price that has been agreed upon and that it is in line with similar properties in the area.

- The deposit amount: Check that you're comfortable with the deposit amount and that it is refundable under certain conditions (e.g., if construction doesn't commence within a certain timeframe).

- The settlement date: Ensure that you're aware of when settlement will take place and whether there are any conditions attached to this (e.g., construction must be completed by a certain date).

- The cooling-off period: Make sure you understand your cooling-off rights and how long you have to change your mind after signing the contract. 

4. What happens if I change my mind after signing an off–the–plan contract?  

If you have signed an unconditional contract, generally speaking, you cannot change your mind about buying the property without incurring some sort of penalty e.g., losing your deposit.

However, if your contract contains a waiver clause or sunset clause , then these may give you some flexibility in changing your mind without being penalised.

5. What is a waiver clause?

A waiver clause essentially states that if certain conditions aren’t met by a given date (usually completion of construction), then you as the buyer are released from your contractual obligations.

For example, if construction isn’t completed within two years from when contracts were exchanged, then buyers may be able to walk away from their purchase without losing their deposit .  

6. What is a sunset clause?

A sunset clause works in a similar way to a waiver clause in that it releases buyers from their contractual obligation if certain conditions aren’t met; however, as opposed to being linked to completion of construction, a sunset clause is usually linked to obtaining development approval from council.

So, if council approval isn’t granted within 12 months from when contracts were exchanged, then buyers may be released from their purchase obligation.  

7. Will I still need to pay stamp duty on an off the plan property?

In most cases, yes – even though settlement hasn’t taken place yet , stamp duty will still need to be paid at the time of exchange.

However, there are some jurisdictions where payment of stamp duty may be deferred until settlement takes place e.g., Victoria and Queensland. 

*Disclaimer - this should not constitute legal advice and you should always speak to a lawyer when executing property contracts.