For investors who have never bought off-the-plan, the decision to pursue this route can be a daunting experience. While owning any property off-the-plan often involves a giant leap of faith, you have the right to ask the selling agent or developer as many questions as necessary in order to make an informed decision.
Leonard Teplin, director of Marshall White Projects, a Melbourne-based project marketer of residential developments, shares his answers to some of the most pressing questions buyers should consider before signing any paperwork.
1. What happens to my 10% deposit?
Your 10% deposit, by way of either cash or bank guarantee (if allowable), will be retained by the vendors legal representative in their trust account until the project is completed, or alternatively, once the sunset period expires.
The sunset period is the formal date set within a property contract by which a project must be completed. If the project is not completed within this timeframe, then the contract is voided and buyers will have their deposits refunded.
2. What happens if my circumstances change and I need to sell my property before settlement?
First, you need to seek advice from your legal representative in regards to your obligation to the vendor under a nominee sale. As the buyer, you have the right to assign your contract of sale under the nominee provision. However, rarely will a developer allow you to promote your purchase, particularly if the developer still has unsold stock prior to or after the settlement period.
3. What are owners’ corporation fees and what do they cover?
Essentially, owner’s corporation fees cover the general administration, maintenance, insurance, and other ongoing costs of a building or complex.
Your selling agent or developer should provide you with an estimate of your quarterly contribution to the fees levied by the owners’ corporation manager. Within the contract of sale, there should also be a budget estimate which sets out both your and other purchasers’ quarterly contributions.
4. How would I know if the visuals shown in the marketing materials will correspond to what will be delivered?
To avoid a major disappointment, it pays to do your research and go with a trusted developer with a proven track record.
“You should seek professional advice regarding your rights and obligations under the contract of sale. This includes the developer(s) rights to substitute ‘like for like’ should a promoted product be unavailable during the construction period,” said Teplin.
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