spearsyParticipant@spearsyJoin Date: 2013Post Count: 5
I have been lurking around here for a while now but first time poster so be nice. We are looking to get our third IP and are looking at buying off the plan.
We have received copies of the contracts for both the land and the build, and I have a few questions:
Do you get the contracts reviewed before you sign?
Do I get a property lawyer to do this?
Does the lawyer need to be in the same state as the purchase?
Are we able to add clauses or make them more specific i.e the finance clause?
Is there anything we should specifically look out for?
Thanks for your help.DWolfeParticipant@dwolfeJoin Date: 2009Post Count: 1,253
Yep get the contracts reviewed by a solicitor (preferably in the same state, so they know the ins and outs). You should be able to add clauses, get your solicitor to write some for you so they are nice and legal, it is then up to the vendor whether they accept the contract with those clauses.
Check through the inclusions list very carefully, don't assume it comes with something (eg, flyscreens) just because the display property, or pictures have them. Check the clauses carefully, such as sunset clauses to see timelines, get your solicitor to flag anything they think you should read carefully and understand before signing.
Some of the other guys on here should be able to offer up some ideas too
DCatalystParticipant@catalystJoin Date: 2008Post Count: 1,404
Do you get the contracts reviewed before you sign? Yes there can be tricky clauses in OTP
Do I get a property lawyer to do this? Yes
Does the lawyer need to be in the same state as the purchase? Yes. Do NOT use their lawyer.
Are we able to add clauses or make them more specific i.e the finance clause? Nt sure. But they won't like them
Is there anything we should specifically look out for? Yes be VERY careful buying off the plan.
By your 3rd question I'm going to guess you live in a different state to the OTP. I can't stress highly enough to do your due diligence. These selling agents are geared to sell to other states. BECAUSE you don't know the true value of the purchase. They often cross securitise these with your PPOR so you don't know they are undervalued. If you decide to go ahead get you OWN loans and have it as a stand alone loan. That way if it's under valued it won't stand up as a stand alone loan. Research the area. How does the price compare to nearby similar properties that are, say 5 years old. You will be competing with them if you need to sell in, say 5 years time.
I'm assuming you know these selling companies make at least $50K commission on selling you these. You are paying for that.
As you can tell I'm not a fan of OTP (although friends have bought many a few years after the initial sell at greatly reduiced prices). Many people DO NOT do their DD and need to sell within a few years.
Lastly go to google and type in:- off the plan pitfalls. Some interesting reading there. I'd be interested on feedback after you've done some DD.
Good luck.Jamie MooreParticipant@jamie-mJoin Date: 2010Post Count: 5,069
I hope you're well – and good to see you posting on the forum
Tried giving you a buzz to discuss this in more detail. Pls give me call or shoot me an email when you get a moment.
Jamiecoolharry67Participant@coolharry67Join Date: 2008Post Count: 56
generally speaking the vendor will allow only 14 days for finance clause for OTP, the settlement will be 1-2 years away which means you will be going unconditional after these 14 days, the banks may not approve your loan after 1-2 years if your circumstances change and you may loose your deposit.DerekMember@derekJoin Date: 2004Post Count: 3,544
Sounds like this is more a house and land deal than off the plan. Is this correct?spearsyParticipant@spearsyJoin Date: 2013Post Count: 5
Yeah I spoke to Jamie yesterday and it is a house and land deal. I was under the impression that because it hadn't been built yet that it was an off the plan.
I guess some of the risks are still the same i.e. market changing during build time, not being able to secure a tenant, build time running over, or not being up to standard.
There are 15 other properties going up at essentially the same time so that would increase the chances of delays, but the builder has done some big developments before so shouldn't be too bad.
BenDerekMember@derekJoin Date: 2004Post Count: 3,544
Some of the issues will remain – particularly those related to market conditions which are always a consideration for 'longer term' contracts.
Have you inspected the block? Often with build contracts there are provisional costs for things such as landscaping costs. If your block has any slope the provisional cost allowance may be insufficient for the block.
Check your inclusions list carefully. Pay very careful attention to the quality of kitchen fitout – you don't want no-name brands for whitegoods. Builders will save money on whitegoods and you may end up with no-name brands that have limited quality or durability. It may be even worth trying to re-negotiate and specify quality brands for such as oven, air-conditioners etc.