Risk Of Buying Off The Plan: Can the Developer Walk Away?

Buying a brand new apartment or house can be wonderfully exciting, especially when you have the flexibility to choose from a large range of floor plans and designs. An “off the plan purchase” is where an apartment or house must be built before the completion of the sale. Off the plan purchases have become an extremely popular choice as it allows you to lock in the current market price even though the building will be completed in the future.

However, with great opportunity comes great risk, and delayed completion is one of the significant problems that too many buyers are facing.

Off the plan contracts include a “sunset date”, which is the latest date by which the property must be completed.  After patiently waiting for years in anticipation of the sunset date, many of our clients are greatly distressed when they receive the bad news that the sunset date has been extended. It is important to ensure that you receive expert legal advice before signing the off the plan contract to ensure that the sunset date can only be extended in very limited circumstances which are beyond the developer’s control.

Buying off the plan also leaves you vulnerable to the risk of the developer trying to walk away from the contract after the sunset date, particularly where they may wish to take advantage of an increase in the property value.

It is important that you fully understand your rights. Under changes made to the law in 2015, each purchaser must agree in writing to the rescission by the developer. If you do not agree to the rescission, especially where you believe that the developer did not take all reasonable steps to complete the project on time, the developer will need to get an order of the Supreme Court of New South Wales to rescind the contract.

Recently, we have been successful in the Supreme Court in stopping a developer from walking away from an off the plan contract where our clients had keenly waited 16 months for the completion of the sale. If you are considering buying off the plan, or a developer has threatened to walk away from an existing contract, contact Indus Lawyers today to take the stress out of your purchase so that you can focus on the joy of settling into your brand new place instead.