An off the plan purchase is a purchase of a dwelling (house, apartment or townhouse) or land prior to its construction or subdivision. Purchasing off-the-plan can sometimes enable you to enter the property market at a lower price (albeit not always the case). This is possible as developers offer lower prices and financial incentives (such as rebates) in order to secure enough pre-sales to start the project. Thus, providing a great opportunity for both investors and home buyers. Whilst there may be good deals on offer, buyers should note that some properties sold this way are often based on estimated future prices and as such can be overpriced.

While it may be beneficial to purchase off the plan can, there are a number of risks to be wary of. Therefore, it is important that you understand your legal rights and obligations before signing the contract. Written below are some things you should know before buying off the plan.


When buying off the plan it’s important to remember that most contracts will not be subject to finance. This is usually because it can take months or years for the settlement to take place and banks will not be able to approve a loan to fund a settlement that far into the future. It is crucial for you to speak to your banker or finance broker before signing a contract to determine if your current financial situation will allow you to purchase a property. Even then, banks cannot usually accurately assess your ‘serviceability’ until they receive all of your financial information (pay slips, expenses, existing assets and liabilities, etc).

Some banks are happy to pre-approve your loan once you sign the contract; however, pre-approvals are only valid for a finite period of time and will be subject to a bank valuation of the property and verification before funds can be advanced. It is wise to save up more money during the lead-up to the settlement as valuations can often be less than the purchase price. If a lower valuation is given, you will need contribute further funds to cover the difference at settlement. Thus, by continuing to save you can alleviate any financial strain you may experience in the event of a valuation coming through short of the purchase price.

Due to the period between purchase and settlement, your financial and personal circumstances may change. The change may affect your ability to obtain a loan. Changing circumstances include redundancy, having children, relocation overseas, etc.

Of course, once you have secured finance and signed all mortgage documents for your property, you are one step closer to settling your property!


Finding your dream home can be an exciting experience and can lead to impulsive decisions. This includes entering into a binding contract before having it reviewed by a conveyancing lawyer. Luckily, if you change your mind about purchasing a property, you are entitled to ‘cool off’ within three business days of signing (read more about the right to cool off here). The right to cool off and terminate the contract comes at a cost of 0.2% of the purchase price or $100, whichever is greater. The 3-day cooling off period, gives you an opportunity to have the contract thoroughly reviewed by a lawyer or conveyancer if not done so prior to signing.

Once the cooling off period ends, you are bound to proceed with the purchase of your property (subject to any other conditions under the contract).


When purchasing an off the plan home, you are not entering into a building contract. This means that you are not afforded with the same rights as a person who organises construction of their home by their chosen builder. Many (albeit not all) off the plan contracts will have a defects rectification clause giving purchasers a right to request rectification of defects after settlement. The vendor is often not required under the contract to repair any defects prior to settlement unless the property is uninhabitable or poses a safety risk to the occupier. Unfortunately defects clauses in most contracts limit the vendor or builder’s liability by only requiring a repair of defined defects that do not included hairline cracks or items which are deemed not to be defects by the vendor. It is therefore prudent that you have such clauses varied to ensure all defects that should be repaired, get repaired.


By law a builder is required to meet certain obligations and standards when they carry out residential building work. These obligations are often referred to as implied warranties and is in place to guarantee that the work is completed:

  • in a workmanlike manner;
  • with reasonable care and skill;
  • using materials that are suitable for the purpose;
  • within the date specified in the contract.

Builders warranty insurance (also referred to as domestic building insurance) is designed insure a newly built property against incomplete or defective workmanship in the event that the builder dies, disappears, or becomes insolvent/bankrupt (for 6 years). The law only requires a builder to take out insurance if the residential building is below 4 storeys (excluding basements).


The sunset clause refers to a condition in the contract which specifies the maximum time frame the developer can take to complete the development before you have the right to pull out. This period is known as the ‘sunset period’. The ‘sunset’ period can be as long as 8 years in some contracts. As such, you should consider whether you are willing to wait that period before purchasing.

If you have questions or would like to engage in our conveyancing services, call us now on 03 8609 1200 or get an obligation free quote online now

One Comment

  1. Ceci  2019-12-05  reply

    Very informative. Thanks

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