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Property Law News, January 2010

Buying a Property "Off-the-Plan"

Many purchasers are faced with the prospect of buying their property "off-the-plan". What exactly does this mean? Here are some tips on the process.

• Time for completion. This involves questions such as how the Completion date is to be determined and claims for delay and extensions of time. What happens if a plan is not registered by the date fixed in the contract? What are the parties' rights of rescission [ending the contract]?
• The subject matter of the contract. There have been many disputes over dimensions of the lots being sold. What happens if the plan annexed to the contract is different from the plan as registered? What happens if the lot number of a lot sold off the plan is changed before completion?
• Arrangements pending completion. The importance of the caveat. The case of the expiring Deposit Bond. Subject to finance clauses.

A number of days after registration of the Strata Plan at the Department of Lands, is usually set as the completion date for such purchases.

Standard contractual terms oblige vendors [sellers] to do everything that is reasonable to have the plan registered within 6 months from the contract date. While this requirement is relatively stringent, where it is complied with but the plan is not registered within the relevant timeframe, the standard contract will provide that both the purchaser and the vendor may rescind the contract. [see Hawes v Cuzeno (1999) NSWSC 1164 (Bryson J); Hardy and anor v Wardy (2001) NSWSC 1141 (Bryson J)]. Thus, where a step is reasonable and necessary for registration of the plan within the 6 month period, the vendor must take such step before a right to rescind will be found.

Significantly, the preferable view of the law in New South Wales appears to be that problems with registration of the plan that arise because of independent contractors upon whom the vendor relies, such as builders or architects, may compromise the right of the vendor to rescind the contract. A vendor who is unable to register the plan for such reason is likely to encounter significant difficulty in rescinding the contract.

Please contact us to discuss any concerns you may have regarding purchasing a property off the plan. We would be happy to discuss it with you and assist with your purchase