” BUYING OFF THE PLAN “
Off the plan sales are contractual agreements where developers promise to provide strata property at an agreed price for future date, subject to necessary approvals from relevant authorities. When purchasing Off the plan, because the block of land is effectively a contract to buy a product which is yet to be built, it may be necessary to make minor changes to plans due to council and engineering requirements.
To satisfy these requirements, contracts for off the plan sales usually provide developers with flexibility in completing the development. Generally, off the plan contracts allow the developer to change specifications in a contract without buyer’s approval. These changes may be required due to necessary architectural or engineering adjustments to meet local government requirements or to secure approval. However, changes may also be made simply to cut costs.
o protect the buyer, off the plan contracts will set usually on the extent of the changes and require changes to be made within specific tolerances (eg. a five percent increase or decrease in proposed size of the unit). Furthermore, there will usually be a provision that gives purchaser the rights to pull out of the contract if the variation significantly affects the property to the detriment of the purchaser.
In NSW, Clause 28 of the 2005 Contract for Sale of Land precedent specimen notes that minor minor alternations to the plan are permissible. However, minor alterations must be validly required or made under legislation: Kannane and Ors v Demian Developments Pty Ltd Limited . Whether a variation is minor is a question of fact and degree: Edelan Pty Ltd v Forster Pastoral Pty Ltd (1985).
The leading case of Flight v Booth (1934) suggests that if the property is materially or substantially different than that contracted to be purchased, a right of rescission can be established. However, if the variation does not go into the essence of the contract or materially alter its substance, the purchasers are not entitled to rescind.
Pursuant to the QLD Land Sales Act, every contract must contain a Disclosure Statement which contains a detailed plan showing the location, dimensions and orientation of the subject lot.
If discrepancy is identified, there are only rights to terminate if the dimensions are materially different from that which was represented in the plan attached to the sales contract. Anything less than this only creates a right to demand compensation.
In accordance with section 9AC(2) of the Sale of Land Act 1962, purchasers can rescind off the plan contracts for any amendments to the plan of subdivision that materially affect the lot.
- 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.
- 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.
Things to keep in mind as a purchaser:
- How much variation in the size of the unit has the vendor nominated?
- Is any such variation acceptable to you?
Purchasing a property can be one of the most important financial decisions you make in your lifetime, so it’s vital that you understand exactly what you’re signing up for. As a purchaser, it is critical that you consult a legal professional and review the provision in detail to ensure that you have adequate protection.
Optimum Lawyers can provide you with services and expertise that go above and beyond the services provided by many operators in the market, while still remaining within your budget. We aim to provide professional and friendly legal advice and effective representation to both individual and business clients and pride ourselves on our ability to provide clear and understandable solutions to your legal issues. When making decisions that could affect your legal rights, please contact us for professional advice.
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