Buying property off-the-plan can be fraught with financial and contractual risk, particularly if you don’t have a comprehensive agreement in place that protects you from the major pitfalls that can, and do, occur.

At the end of last year Parliament approved new conveyancing laws in response to an increase of scenarios where purchasers of off-the-plan properties had been let down by developers.

The Conveyancing (Legislation) Amendment Act 2018 (passed by Parliament on 13 November 2018) will provide stronger protection for off-the-plan property purchasers by introducing key changes to mandatory disclosures, notification of changes, registered documents, sunset clauses and cooling off periods.

Mandatory Disclosure Regime

Developers are now mandated to disclose crucial information about the property development including; sunset dates, proposed plans with details of easements and covenants, proposed by-laws and a schedule of finishes before the contract is signed.

Notification of Changes

If you are purchasing property off-the-plan, as a buyer you, your decision to buy can only be based on the ‘planned’ construction for the property. You can review construction blueprints or artist renderings, however there is no physical property or display unit to assess.

As anyone who has had any involvement in building or renovation, you will know how often even the best plans will change.

Under the new legislation, developers will have to notify purchasers of changes to a ‘material particular’ during the development. These are changes that will adversely affect the use or enjoyment of the lot being sold, such as the size of dwelling or internal configuration. If the purchaser is ‘materially prejudiced’ to suggested change and believe that if they had of known of that particular change, then they would not have purchased the property, they may be able to rescind the contract.

While material prejudice has not been defined in the legislation, the phrase has been considered extensively by the Queensland courts. They have decided that:

  1. the test is objective, having regards to the buyer’s circumstances;
  2. there must be a causal relationship between the inaccuracy and the prejudice of the buyer;
  3. there must be proportionality between the inaccuracy and the prejudice;
  4. the legislation is consumer protection legislation, so will be construed to assist the buyer.

Registered Documents

Developers will need to provide the purchaser with a copy of the final registered plans at least 21 days before settlement. Previously a purchaser would typically receive a copy of the registered plan at settlement.

Sunset Clauses

One of the major benefits for buyers of off-the-plan property is the financial gain they can potentially make by buying the property in current day prices to then realise an increased property value by the time that the construction is complete, subject of course to the fluctuations of property market.

The contractual terms of sunset clauses allow either party to terminate an off-the-plan contract should a certain event happen, such as the plan not being registered by a specific date.

In the past, there have been many cases where the sunset clause has seen buyers lose out to developers who, for whatever reason rescind the contract. The buyer (who’s deposit has helped fund construction) gets a refund, and then the developer sells it for a higher price to someone else. The buyer is then left with no property and no financial benefit.

To help prevent this scenario, the current legislation builds on laws that were introduced by the Government in 2015 and prevent developers from using sunset clauses to end contracts without an order from the Supreme Court (unless the purchaser agrees).

The new legislation extends that application to capture other events that trigger termination of the contract, like the issue of an occupation certificate. It also confirms that the Court can award damages if rescission is permitted.

Cooling Off Period

The cooling off period for off-the-plan contracts has been extended from five business days to ten business days.

The extra 5 business days will assist the purchaser by allowing more time to obtain finance approval from their bank, discuss the Contract with their lawyer and takes a little bit of the pressure off a purchaser before they become legally bound by the Contract.

NB The off-the-plan provisions are not yet in force and will commence on a date to be proclaimed. 

While the new conveyancing laws provide off-the-plan buyers with more protection around their purchase, each contract is vastly different from another. We highly recommend that you seek legal advice before entering into any contractual arrangements for this type of real estate investment.

Scott Williams is a Partner with Donovan Oates Hannaford. He has a wealth of experience in providing advice on Property Law and Conveyancing.

If you would like to discuss any issues you may have with respect to off-the-plan property contracts or you would like to find out more information about how these changes may affect you, please contact Scott on 02 6583 0427 or

Source: NSW Government Office of the Registrar General, Nov 2018

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