Buying Off The Plan? Three Points To Consider Before You Sign On The Bottom Line

First home buyers have a lot to consider when they are leaping into the real estate market for the first time and buying off the plan brings an additional set of terminology that needs to be learned. Buying off the plan means you are purchasing a home that is not yet built and while your conveyancing lawyer will be taking a close look at your contract, there are some points you need to know before you even enter the contract signing stage. Here are three things that you need to investigate closely before you sign on the bottom line.

Sunset Clause

A sunset clause is often included in off the plan contracts and it is inserted as a protection for both the developer and the buyer. This clause advises the date that the development must be completed by and both parties can withdraw from the contract if the development is not finished on time.

There was a recent case, however, where development contracts were cancelled under the sunset clause. The developer had sold the construction to another company who then cancelled the existing contracts using this clause. The new developer then advised the buyers that if they wanted to sign new contracts it would be at a higher price than the original. They were asking between $800,000 and $1 million more than the original price.

While this case is not morally acceptable, it is not an illegal move. Therefore, if you see a sunset clause in a contract for a property that you are considering buying, it is very important that you obtain proper legal advice first.


For development construction, the building may not be able to start until certain preconditions have been met. Preconditions may include:

  • Council approval of the development.
  • A rezoning application being accepted if the land is not currently zoned for the type of development being considered.
  • Plans being finalised that are acceptable to the developer.

If the preconditions are not met, then the developer can pull out of the contract. If this occurs then you have lost valuable searching time on a property that is no longer going to be built. If you are looking for a property to move into and your search is being dictated to by a timing issue, it is best to stay away from off the plan developments that have not yet moved past the preconditions stage.


When you sign an off the plan contract you are expected to pay a deposit to secure your interest, but in the instances that a contract is cancelled because of a sunset clause being invoked or preconditions not being met, what happens to your deposit?

It is important that your conveyancing solicitor writes a clause into the contract to protect the return of your deposit if there is not one already there. You must also be 100% sure that the development company is financially sound before you hand your money over. If they go bankrupt before the development is completed, the chances of you regaining your deposit are slim to nil.

When it comes to entering into an off the plan contract as a first home buyer, it is vital that you check with your conveyancing lawyer before you sign anything. As there is not a physical property yet constructed for you to lay claim to, there is a lot that can go wrong along the way. Do not enter this transaction thinking there is no risk and make sure you have an experienced professional on your side to help you if things go wrong. By doing so, your chances of coming out a brand new home owner at the end of the transaction are greatly enhanced. For more information, contact a legal specialist like Geoff Williams & Associates.