What questions should you ask when buying off the plan?
For those who have never bought off the plan or for those who haven’t moved for many decades, it can be a daunting experience. Whilst owning any property off the plan often involves a leap of faith, you have the right to ask as many questions of the selling agent or developer as you need to in order to make an informed decision.
Below off-the-plan sales expert and director of Marshall White Projects, Leonard Teplin shares the answers to some of the most pressing questions that buyers should consider before committing to any paperwork.
1. What happens to my 10% deposit?
The 10% deposit, by way of either cash or bank guarantee (if allowable), will be retained by the Vendors Legal Representative in their trust account until the project is completed or alternatively the sunset period expires.
The sunset period refers to the formal date set within a property contract by which a project must be completed. If the project is not completed within this timeframe then the contract is void and buyers will have their deposits refunded.
2. What happens if my circumstances change and I need to sell my purchase prior to settlement?
Firstly, you need to seek advice from your legal representative in regards to your obligation to the Vendor under a nominee sale. You have the right to assign your contract of sale under the nominee provision, however, rarely will a developer allow you to promote your purchase, particularly if the developer still has unsold stock prior to or even after a settlement period.
Most contracts of sale will detail your rights and obligations in such circumstances.
3. What are the owners corporation fees and what do they cover?
Essentially owners corporation fees cover the general administration, maintenance, insurance and other ongoing costs of a building or complex.
Your selling agent or developer should provide you with an estimate of your quarterly contribution to the fees levied by the Owners Corporation Manager. Within the contract of sale there should also be a budget estimate which sets out both your and other purchaser’s quarterly contribution.
4. Who are the people behind the development?
Often buyers will ask “who is the developer”. Whilst this is certainly a valid question, few go on to ask “who is the architect”, “who is the project manager”, and “has a builder been appointed” (or at least is there a panel of builders who have been asked to tender the construction cost).
You should visit each alliance partner’s website in order to establish their credentials and gain an understanding of the caliber of projects they have delivered in the past.
5. How do I know what I see in the renders and marketing material will correspond to what is actually delivered?
Again this is where it pays to do your research and go with trusted developers, with a proven track record.
You should seek professional advice regarding your rights and obligations under the contract of sale. This includes the developer(s) rights to substitute “like for like” should a promoted product be unavailable during the construction period.
6. If I am an investor, what is the best time to lock in a managing agent?
Often the appointment of a Managing Agent three months prior to the forecast completion is appropriate. It is often beneficial to appoint the same company you bought the apartment from to handle management of it, provided they have an ongoing relationship with both the developer and project manager. This often gives you the “inside running” prior to any proposed settlement – speak to your property manager for more details.
Source: Leonard Teplin