What to Look for When Reviewing Off-the-Plan Unit Contracts

When you buy an existing house or property in a body corporate (for the sake of simplicity I will call them units) most agents and solicitors will use standard contracts. The terms of these contracts have been drafted to be fair to both buyers and sellers. When reviewing these contracts most lawyers or people will concentrate on the particulars of the contract and any special conditions.

This means that not only can a lawyer do this very quickly, a lot of Buyers or Sellers can check contracts themselves. While there are still things that can go wrong the chances of there being a problem are greatly reduced.

When it comes to purchasing a unit off the plan (the units are still in the process of being constructed) it is possible for the Seller’s lawyers to use a standard contract and add in any necessary special conditions. Almost no one does this though, instead redrafting the whole contract.

So instead of just checking the particulars of the contract and special conditions, you now need to read every single clause in the contract. Noting that the contracts and disclosure statements may number in excess of 150 pages. This is important because the Seller’s lawyers are under a duty to do the best for the Seller which many lawyers have interpreted to mean gaining every possible advantage for their client.

The good news is that lawyers tend to copy each other so the contracts are often very similar. Meaning that the clauses you need to pay attention to can be summarised as follows;

1. The Sunset Date. This is the last date by which the unit must be constructed and registered with the titles office. They will vary from 6 months to 5 and a half years with the average being 3 and a half years.

2. Variations. The Seller will normally reserve the right to vary the details of the unit including the dimensions. The standard is normally 5%, before the Buyer will have a right to terminate the contract.

3. Carparks. While the contract will state you have a carpark the Seller will normally reserve the right to move the location of the carpark. If you have an oversized car you may want to check roof heights. I have seen some contracts which by inference allowed the Seller to delete the carpark completely.

4. Finishes. The Seller will normally reserve the right to replace these with items of similar quality. I always recommend Buyers scrutinise the list to ensure everything they have been promised is included eg reverse cycle air conditioners.

5. Defect Liability Period. The contract will normally provide that you can’t refuse to settle because of defects. The Seller should agree to fix any defects notified to it within 3 months of settlement. Scratches and dents must be notified before settlement. Some contracts have the 3 months running from the date of registration of the plan, which is not recommended. I have even had one where the 3 months started from when the certificate of final completion issued. This could have meant the defect liability period expired before settlement.

6. Adjustments. These should be done from the date of settlement. It is becoming very common for the contract to provide for them to be done from the date of registration of the plan.

7. Land Tax. For residential contracts the Seller should pay all land tax, however most contracts provide for the buyer to pay some of the land tax.

8. Default Interest. The standard REIQ rate is approximately 9.5% but rate listed in the contract is more often than not 15%.

9. Investment of deposit and interest. You want the Deposit holder to be required to invest the deposit and the interest to go to the Buyer unless the Buyer is in breach of the contract.

While it is always recommended that you have a lawyer review the contract if you are going to do it yourself we suggest you pay particular attention to the above issues.

Roland Taylor – Director Statewide Conveyancing


Written: 17 August 2016, Updated: 6 April 2020

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