Buying a Unit Off the Plan –the Contract – Part 4
Surely we must be almost there! There is after all only so must one can take in about off the plan units. In our final chapter of this absolutely riveting series which has surely kept you on the edge of your seat (or has caused you to fall off your seat due to boredom and tiredness), we look forward to settlement. Yes that date where you hand over any of the purchase price you have not yet paid in return for receiving the keys to your shiny new unit.
As has been noted previously, it is important that your solicitor advises you on the process involved with Settlement so that they may tailor their advice to your individual circumstances. Andrew Pine solicitor is a lawyer experienced in advising you on such matters and can be contacted on the details outlined at the bottom of this article.
Before we look at when settlement will be, how long will it take from when you sign the contract until when you settle? Bearing in mind all of the points in the preceding articles (such as the Seller having the right to terminate in a plethora of circumstances), the Seller has up to a date known as the Sunset Date to have the property ready for you to buy and move in.
The Sunset Date is a date defined in the Contract of Sale. Your solicitor is able to advise you on when this date is. It is usually a date which is a certain number of years after the Contract Date. The limit on how far away this date can be is five and a half years after the Contract Date. Yes, over half a decade after you give away your hard earnt deposit, your building may still not yet be complete. It is therefore essential that you be advised on this date before you sign a contract. Andrew Pine lawyer is a solicitor who can advise you on when the Sunset Date under your off the plan contract is.
Nothing happens for up to five and a half years, then one day your solicitor advises you that they have received notification from the Seller that the building is complete, that the titles have been subdivided and that you must now settle by a due date or be in default of the contract.
An off the plan contract usually has a clause which states how many days after registration of the subdivision settlement must occur. That is, once the Titles Office has processed the subdivision so that you receive an individual title for your unit, the Seller will notify you of this and require you to settle a certain number of days after this date (with this number of days being specified in the contract).
It is usual for this number to be 14 days after the Seller notifies you that the title for the unit has been created. After having to do almost nothing for years, you are required to spring into action and be ready to settle within a couple of weeks. If you are not ready, the Seller may be entitled to terminate the contract, keep your deposit and pursue you for damages. Time is of the essence in Queensland, afterall. (Please note, the preceding examples are only indicative and you should receive advice from your solicitor in regard to the implications of you not settling on time).
Your solicitor should advise you of your rights and obligations in regard to settlement. Your solicitor will able to assist you with the finance aspects, such as arranging for a valuation (usually required), as well as the implications of your not being ready to settle when required.
Rates, water and body corporate levies are the common adjustments payable at Settlement in a usual purchase of a property which is in existence. The Seller is usually responsible for these items up to the date of Settlement, with the Buyer being responsible for adjustments after Settlement. Land tax is also usually not payable by the Buyer as this is a tax which arises due to the Seller’s financial circumstances.
As off the plan contracts are drafted heavily in favour of the Seller, you may be required to pay an unfair proportion of these adjustments at Settlement. The Seller may require the Buyer to pay rates, water and body corporate levies from a date earlier than Settlement (such as the date the unit’s title was created, usually around 14 days before Settlement). It is unfair that you should have to pay these adjustments for a period of time during which you are not entitled to live in the Property.
As noted above, land tax is often not payable by a Buyer when purchasing a property already in existence. A buyer is however often required to also pay a percentage of land tax in an off the plan scenario. Land tax is a levy charged by the Office of State Revenue due to the owner of the land (Seller) owning property over a certain value on a certain day of the year. The more property you own, the more land tax you pay. The land tax payable for a particular property is therefore more likely to be higher for a developer who owns a lot of property than it would be for you. You are therefore essentially paying part of the developer’s land tax bill.
You should always ensure that your contract is reviewed by your solicitor before you sign. The clauses contained in a contract relating to adjustments can significantly impact the amount you are required to pay at Settlement. Andrew Pine solicitor is a lawyer experienced in off the plan developments, so can review and advise you on your contract in regard to what adjustments you will be forced to pay.
As this series has noted, there are numerous aspects of an off the plan contract. As has been repetitively noted to you, it is of upmost importance that you receive legal advice relevant to your individual circumstances before you sign the contract.
This series of articles should not be relied upon for legal advice and certainly should not be used in substitution of receiving such advice. If you require a solicitor to advise you on any aspect of off the plan purchases, Andrew Pine solicitor is available and can be contacted on the below details.
Disclaimer: Andrew Pine solicitor is a property lawyer practising in Queensland. Andrew is not qualified to give accounting or financial advice. This article is written solely as an opinion of the writer. This article should not be relied upon for legal, accounting or financial advice. You should always seek advice which is tailored to your individual circumstances.