Off-the-plan Property Purchases in NSW

Buying a property off-the-plan involves purchasing before construction has been completed. While this can offer advantages, off-the-plan contracts are often more complex and involve additional risks and considerations.

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This page provides general information to help buyers in New South Wales understand key aspects of off-the-plan purchases and what to be aware of throughout the process.

What Is an Off-the-Plan Purchase

 

An off-the-plan purchase occurs where a buyer enters into a contract for a property that has not yet been built or completed.

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Common examples include:

• Apartments in new developments

• Townhouses under construction

• Land and house packages

 

Settlement usually occurs months or years after exchange, once construction is complete.

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Contract Terms and Special Conditions

 

Off-the-plan contracts typically contain extensive special conditions drafted by the developer.

 

These conditions may address:

• Construction timeframes

• Variations to plans, finishes or materials

• Provisional lot sizes and boundaries

• Developer rights to amend the contract

 

Buyers should understand how these provisions may affect their rights and obligations over time.

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Sunset Clauses

 

A sunset clause sets a deadline by which the development must be completed and settlement occur.

 

Important points to understand include:

• Who may rescind the contract if the sunset date is reached

• Whether extensions are permitted

• Legislative restrictions on developer rescission

 

Sunset clauses can significantly affect buyer certainty and should be carefully reviewed.

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Delays and Construction Risks

 

Construction delays are common in off-the-plan developments and may arise due to:

• Weather events

• Supply chain disruptions

• Regulatory approvals

• Changes to design or scope

 

Buyers should be aware that settlement dates are often estimates rather than fixed deadlines.

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Finance Considerations

 

Because settlement may occur long after exchange, buyers should consider:

• Whether finance approval will still be available at settlement

• Changes in lending criteria

• Interest rate movements

• Valuation risks

 

Buyers may need to reapply for finance closer to settlement.

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Deposits and Trust Arrangements

 

Deposits for off-the-plan purchases are usually paid on exchange and held in trust until settlement.

 

Key considerations include:

• Length of time funds remain in trust

• Early release provisions (if any)

• Security for deposit monies

 

Understanding how deposits are handled is important when committing funds for an extended period.

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Settlement of Off-the-Plan Purchases

 

Settlement occurs once construction is complete, strata plans are registered (if applicable), and all conditions have been satisfied.

 

Settlement preparation may involve:

• Final inspections

• Adjustment of outgoings

• Registration of plans

• Electronic settlement via platforms such as PEXA

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Understanding the Risks

 

Off-the-plan purchases can offer benefits but also carry additional risks compared to established properties.

Careful consideration of contract terms, timing and financial exposure is essential before committing to an off-the-plan purchase.

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Important Note

 

The information provided on this page is general in nature and does not constitute legal or conveyancing advice. Buyers should seek advice specific to their circumstances before entering into an off-the-plan contract.