Property guidance by Quay Law
Property guidance by Quay Law
Unit title guidance from Quay Law
Ian Mellett, Barrister and Solicitor, Quay Law
Buying off the plan means agreeing to buy a unit before it has been built, and sometimes before construction has started. It can offer a new home at today’s price, with modern standards and the chance to choose finishes. It also involves a longer and less certain path to settlement than buying an existing property.
It is important to involve your solicitor at an early stage in any property transaction, but particularly in an off the plan purchase. There are a number of things that need to be checked before you sign.
When you buy off the plan, you sign an agreement based on plans, specifications and marketing material rather than a finished building. Settlement usually occurs once the building is complete and separate titles have been issued, which may be well into the future.
Off the plan agreements are prepared by the developer’s lawyers and are often lengthy and detailed. They generally give the developer considerable flexibility, and the buyer considerably less.
The key thing in an off the plan purchase is to have your deposit held by a stakeholder.
Off the plan deposits are often held for a long period, and the agreement will set out when the deposit is payable and where it is to be held. We recommend that the deposit is held by a stakeholder, such as a lawyer’s or real estate agent’s trust account, until settlement, rather than released to the developer. If the development does not proceed, a deposit held by a stakeholder is far easier to recover.
Check these terms carefully before you sign:
Most off the plan agreements include a sunset clause. This sets a date by which certain things must have happened, such as completion of the building or the issue of titles. The sunset date determines what needs to be done before that date, and if the project drags on past it, the agreement sets out the purchaser’s options for resolving the position.
The Unit Titles Act 2010 also restricts a developer from relying on a sunset clause to cancel an off the plan agreement without either the buyer’s consent or the approval of the High Court. This prevents developers from cancelling simply to resell units at a higher price in a rising market.
It is important to understand exactly how the clause in your agreement works, what the sunset date is and what your options are if it is reached.
Because there is no established body corporate history, disclosure for off the plan units differs from disclosure for existing units, and separate requirements apply under the Act. Pay particular attention to the proposed levies, the proposed rules and any arrangements the developer has made on behalf of the future body corporate.
How lenders approach unit title apartments and townhouses, what can affect lending, and how to protect yourself with the right finance condition.
What a unit title pre contract disclosure statement must contain since 2023, what to look for when reading it, and your rights if it is late or incomplete.
How body corporate levies are set in New Zealand, what the operating, maintenance and contingency funds are for, and how special levies work.
Off the plan agreements reward careful reading. We recommend contacting us as soon as you are considering a purchase, and in any event before you sign.
If you are buying or selling a unit title property in Auckland, we recommend speaking with us before you sign an agreement. Contact Ian Mellett at Quay Law, Barrister and Solicitor, by completing our enquiry form below, or call us on 09 523 2408.
The information on this page is provided for general information purposes only and is not legal advice. Every transaction is different, and all matters should be discussed with the team at Quay Law.