Buying a strata unit ‘off the plan’ – what are the risks?

Buying off the plan is tricky because you can’t see, touch or feel what you are buying. Here are some tips to get you started:

  • understand that changes to the development of the balance of the scheme or land near the proposed development may occur and your contractual remedies if you don’t like these may be limited.
  • understand the timing and the developer’s rights to extend the time for completion – usually there is a sunset date by which the development must be completed and your purchase must be finalised but there are also usually rights for the vendor to extend that date in certain circumstances – make sure you understand these and they fit with your plans.
  • discuss with your lawyer the circumstances where you would not want to go through with the purchase and either make sure they are covered in your rescission rights in the contract or don’t proceed – each buyer will have different ‘deal breakers’.
  • understand the structure of the scheme:
    • how is the strata building structured?
    • is there one strata scheme for the whole building or is it a stratum subdivision?
    • often where there will be residential apartments in the upper levels and commercial or retail space in the lower and ground floor levels a separate strata scheme is established for the residential part and for the commercial and retail part.
    • this sort of ‘mixed structure’ impacts on your ability as an owner of a residential apartment to control what happens in the commercial/retail part.
    • if it is a mixed structure there should be a Building Management Statement in place which sets out how the two strata schemes co-exist.
  • have a look at other developments the developer has completed. Do you like them? Do the finishes look of good quality?
  • get a copy of the full development consent for the scheme you are buying into and read it and have your lawyer read it.
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