Buyers have the notion of lower stamp duty in all off the plan purchases. This is not always true. Vendors usually give purchasers incorrect stamp duty benefits in order to secure purchases. A word of caution in purchasing off the plan properties is to never trust initial stamp duty value provided.
Settlement date is the date when you will have to pay for the agreed lot. The purchase price is provided in the contract and is usually the purchase price less the deposit with adjustments for outgoings.
The rule of thumb in buying off the plan properties is that the purchaser is entitled to rescind the contract and to a return of deposit if the developer fails to complete the project by the sunset date or upon settlement. Make sure this is stated clearly in the contract.
Rescinding the contract
In certain circumstances,the purchaser and the developer can rescind the contract before the settlement date. Grounds for rescission and special conditions are provided in the contract itself. For the developer, he can rescind if the development becomes unviable or if it has become impossible due to state regulations or other events stated in the Contract.. As for the purchaser, he can cancel the contract if the project is not completed on time or if sub-division plan is not registered within the specified time. The purchaser, in some specified conditions, can also rescind if the finished project is too far removed from agreed specifications. .
Both parties can terminate the Contract if the lot is not completed by the sunset date set out in the Contract.
In off the plan contracts, the developer is given some form of flexibility to apply minor changes as to floor plans, colour schemes and type of fixture as some products can become unavailable upon construction. As long as the changes applied are minor and not too far removed from the agreement, the purchaser is not entitled to cancel.
Deposit and Financing
Purchasers are usually required to put down deposit upon signing of the contract. The price is locked in at the current market price. Therefore, even if the market price of the property goes up at the time of settlement, you will only need to pay the agreed price.
Deposit can also be in the form of bank guarantees or bonds. You should have a talk with your developer regarding your preferred type of deposit. Other off the plan contracts also have a clause where the purchasers are allowed to rescind if they opt financing but their applicationa are subsequently disapproved. Examine your contract if it contains a similar clause.
Defects and Variations
Off the plan contracts have a maintenance clause wherein the developer assumes responsibility for defects of the finished project. Familiarize yourself with what defects are covered under this clause and what possible recourse you have in case of other defects.
Between the contract date and completion, it is possible that some fixture or furniture stated in the contract will become unavailable or obsolete. The developer will have to substitute or replace them with what are currently available. Variations are sometimes necessary. As long as the variations are not too far removed from the agreed specifications, the purchaser can not cancel the Contract.