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Sunday, 20 May 2012

Dear Visitor,

The grass is always greener on the other side of the fence - but that's because they use more manure!

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This month we discuss considerations when purchasing a property 'off the plan'

We will also provide updates on the status of the commencement date for the Neighbourhood Disputes Resolution Act.

Buying 'Off The Plan' - Considerations for purchasing a property prior to its completion

Buying a property “off the plan” is the purchase of a property which is either not fully constructed or for which construction has yet to commence. It derives its name from the fact that the only detail you have of the property is obtained from the marketer’s glossy brochures or “off the (proposed) plan” which is intended to be registered when the project is completed.

Buying “Off the Plan” is a popular way to invest in residential property in Queensland. Purchasers can lock in a purchase price for their new home or investment property months, or even years, prior to completion of the property.

There are a number of advantages for purchasing a property in this manner as not only are you purchasing a brand new property, but you often have the opportunity to customise it to your own specific requirements and you can potentially benefit from any capital gains generated during construction, i.e. paying current market price for a property that will be worth more when completed in the future.

An additional benefit is that a long settlement phase also allows the buyer time to realise assets or raise the finance needed to complete the purchase in an ordered manner and without pressure of an imminent settlement date.

Buyers intending to purchase a new property as an investment, generally qualify for depreciation allowances as the building, fittings and fixtures can be depreciated and at better rates than for older or “pre-owned” properties.

For information on the depreciation advantages available to property investors, contact your accountant or quantity surveyor.

Standard forms and Due diligence

Due to the complexity of describing the property and the requirements of consumer protection legislation, the Standard Law Society / REIQ contract is not suitable for “Off the Plan” purchases. Developers, therefore, create separate contracts with each development they undertake.

These contracts, whilst following the same general format, are all different and can even show variances between different developments undertaken by the same developer. It is, therefore, essential that these contracts be checked by your Solicitor and that you receive suitable advice before entering into them. If you are uncertain in any way about the contents of the documents you can request the insertion of a clause stating that the contract is subject to your carrying out further enquiries and the approval of your Solicitor of the contract. This is referred to as a “Due diligence “ clause.

When purchasing “off the plan” there will be various items which will require attention. The answers to these issues and how they are dealt with will vary from property to property and Purchaser to Purchaser. There are no wrong answers to these issues it is all a matter of what you (as a purchaser) wish to achieve. Factors that normally you will require the assistance of your Lawyer for are as follows :-

· Possible minor changes to the floor plan, size and configuration of the lot.

· Community Living issues (eg. the keeping of Pets)

· Suitable methods for payment of the Deposit

· Finance

· Sunset clauses

· Cooling off periods.

In Queensland the building industry is heavily regulated for the protection of consumers. This includes such things as the transfer of consumer warranties on any equipment supplied in the sale; Body corporate Insurances; registers of common assets; disclosure of management and service agreements; five year sinking fund budgets and forecasts and many other issues too involved to elucidate on in this broadsheet.

The best advice that we can give you is…

If you are considering purchasing a property off the plan, be sure to obtain advice from your Solicitor.

'Q' is for 'Quick Updates'

Update on Neighbourhood Disputes Resolution Act 2011

'Q' is for 'Quick Quizz'

Look at the chart below and say the COLOR of the word, not the word itself.

Why is it so difficult?

Answer

Because the right half of your brain is trying to say the color, while the left side of your brain is trying to say the word.

'Q' is for Questions

Do you have any legal questions you would like to ask?  Perhaps you would like us to discuss a particular topic in our next newsletter.  Let us know how we can help by sending an email to: enquiries@qsolicitors.com.au