Off-the-plan in a tower rush: the 14-point checklist
Buying off the plan means committing to something that does not exist, on terms written by the party building it, with settlement two or three years away. That is not automatically a bad deal — it is how most new apartments in Australia are sold — but it means the contract is doing far more work than it would in an established-property purchase.
What follows is the order in which a careful buyer establishes the facts. It is designed to give you specific questions for your conveyancer or property lawyer, not to replace one. Every state has its own sale-of-land and owners corporation legislation, and the detail differs; the questions below travel, the answers do not.
Do this before the cooling-off period runs out, not after. Cooling-off rights for off-the-plan purchases vary by state and some situations exclude them entirely. Establish on day one exactly what your cooling-off position is, because every item below is much cheaper to act on inside that window.
Who you are dealing with
1. Who is the vendor, really?
The vendor is very often a special-purpose company set up for this project alone, with minimal assets. That is normal and not sinister — but it means the entity you have a contract with may have little behind it if things go badly. Ask who the parent or development group is, and what else they have delivered.
2. Who is the builder, and are they still trading?
The builder is a different entity from the vendor and is the one whose workmanship you will live with. Ask for the name, check whether it holds current registration in the relevant state, and look at what it has completed. A builder appointed later, or changed mid-project, is worth knowing about.
Time, and what happens when it runs out
3. What is the sunset date, and who may rescind?
The sunset date is the long-stop date by which the plan must be registered or the building completed; past it, one or both parties may be able to walk away. Read carefully whose right it is. Several states have tightened the rules on vendors using sunset clauses to terminate and resell, but the protections and the process differ, so establish exactly what applies to your contract.
4. What is the expected completion date, and how much can it move?
There is usually an anticipated completion date and, separately, a set of clauses allowing extensions for weather, industrial action, supply delays and other causes. The realistic question is not “when will it finish” but “how far can this move before I have any right at all”.
Money
5. How much is the deposit, and where does it sit?
Establish the amount, and then the more important question: is it held in a trust or controlled account until settlement, or is it released to the vendor to fund the build? Whether a deposit bond or bank guarantee is acceptable instead of cash is also worth asking, because it changes what your money is doing for the next three years.
6. What are the estimated owners corporation levies?
The disclosure material should include an estimate of the first-year levies and the proposed budget. Treat developer-set first-year budgets with healthy scepticism: they are prepared while the building is being sold, and they are frequently the most optimistic number anyone will ever attach to that building. Ask specifically whether the capital works or sinking fund contribution is included and how it was arrived at.
7. What will the duty and any concessions actually be?
Stamp duty treatment of off-the-plan purchases varies by state and changes with policy, and eligibility for concessions typically depends on your circumstances and on timing. This is a question for your conveyancer and the state revenue office, in writing, before you sign — not something to assume from a sales brochure.
What you are actually buying
8. What do the plan of subdivision and the lot boundaries show?
The plan is the legal description of your apartment. Check where the lot boundary sits, what is inside your lot and what is common property, and how the balcony, any courtyard and any storage are treated. Boundaries decide who repairs what for the entire life of the building.
9. Is the car space on title, or merely allocated?
There is a meaningful difference between a car space that is part of your lot or a separate lot on title, and one that is common property licensed or allocated to you. It affects resale, whether you can sell or lease it separately, and what happens if the allocation is ever reorganised. The same applies to storage cages.
10. What does the schedule of finishes commit to?
Read the schedule against the display suite, then read the substitution clause. Wording that permits materials “of equivalent quality” is standard and is not by itself unreasonable — supply chains genuinely change over three years — but it is the clause that decides whether you can object later. Ask who determines equivalence.
11. How much can the area and the layout change?
Most off-the-plan contracts permit a tolerance on floor area and some variation to layout and building design without giving you any right to withdraw. Find the number. A tolerance that sounds small is a real amount of floor space in a compact apartment, and a design variation clause can extend to things you might care about, such as which way a window faces or where a services duct lands.
Delivery, defects and the building's own paperwork
12. What warranty and insurance protection applies?
Ask what statutory warranty applies to this building in this state, for how long, and whether domestic building insurance or an equivalent scheme covers apartment buildings of this height — because in several jurisdictions it does not apply to taller residential buildings. Then ask what the contractual defects liability period is, which is a separate and usually shorter thing.
13. What are your pre-settlement inspection rights?
Establish whether you are entitled to an inspection before settlement, how much notice you get, whether you may bring your own building inspector, and what happens to items you record. An inspection right that exists only in theory, or that arrives three days before settlement, is worth much less than one written properly into the contract.
14. What happens at settlement if your finance falls short?
This is the point that surprises the most buyers. Your lender values the apartment near settlement, not when you signed. If the valuation comes in below the contract price, the lender lends against the lower figure and you must cover the difference in cash. Off-the-plan contracts are typically not subject to finance, so a shortfall does not release you from the contract.
Ask your conveyancer this exact question: “If my valuation at settlement comes in ten per cent below the contract price and I cannot fund the gap, what are my obligations and what can the vendor do?” The answer — in writing, before you sign — is the most valuable thing on this page.
Documents to ask for, all at once
- The contract of sale and every annexure, not the summary.
- The vendor's statement or disclosure statement required in your state.
- The proposed plan of subdivision or strata plan.
- The proposed owners corporation rules and the estimated budget.
- The schedule of finishes, and the specification if one exists.
- Any building management statement or agreement with a building manager, including its term. Long management contracts inherited from a developer are a recurring source of owner frustration.
Then hand all of it to a conveyancer or property lawyer in the state where the property sits, with your list of questions attached. The purpose of this checklist is to make that appointment far more productive than it would otherwise be.
Once you have signed, the next thing worth understanding is what the construction programme is actually doing, and after handover, how to read the inspection report.