The risks of buying off the plan
Buying off the plan can save you money, but there are risks you need to fully understand first.
Make sure that you get proper advice from an experienced property lawyer before you enter into one of these contracts.
It is a common problem that by the time the building is finished and the purchaser can actually see what they are getting that the builder has changed things from the original plan and the contract provides that any “minor” changes cannot be complained about.
A further significant problem is that the contract usually says the purchaser cannot delay Completion because there are “building defects” unless those defects are so major that the Unit is totally uninhabitable. The purchaser is forced to Complete the purchase (i.e. pay the full price) and then lodge a list of defects with builder and argue with the builder about whether the builder has to fix those “defects”.
The recent problems highlighted in the news media in regard to the Opal Tower is just a high profile example of a common problem unfortunately.
Could the Opal Tower problem happen to me?
In a word, yes. The big problem with new properties is that for any building over three stories the developer is no longer required to take out Home Owners Warranty Insurance.
There were many problems with the Home Owners Warranty scheme but the alternative, which is no insurance, is far more undesirable. If there are serious defects then the Strata Board has to pursue the developer to pay for those defects out of their own pocket.
In the recent Opal Towers scandal the Premier is talking about improving the certification process, and penalties for the certifiers, but there is no talk of forcing developers to provide insurance for the building. The risk has been shifted from developer to purchaser in the current political climate.
This doesn't mean that you shouldn't purchase off the plan, just that there are risks associated that you should fully understand before you purchase off the plan.
If you would like to book a free initial consultation to understand how Coode & Corry can help you with your purchase then please contact us.
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