A contract for a proposed property
The contract may relate to:
- A proposed block of land
- An apartment or another lot in a proposed community title scheme
- A house and land arrangement involving linked or separate contracts
- A property that is already under construction although not ready for settlement
These arrangements do not necessarily follow the same legislation, disclosure requirements or settlement process. The documents should be reviewed according to the particular property and contract.
Plans, renders, display suites and marketing material do not necessarily form part of the seller's contractual obligations. Confirm which plans, specifications, finishes and inclusions are incorporated into the contract.
Understand what the seller must deliver
Off-the-plan contracts are often detailed and may give the seller particular rights to make changes, extend timeframes or satisfy development requirements before settlement.
Before signing, ask a Queensland solicitor or law practice to explain:
- The property being purchased and how it is identified
- The disclosure documents applying to the proposed lot
- The plans, specifications, finishes and inclusions forming part of the contract
- The seller's rights to change dimensions, materials, layout or common property
- The deposit amount, holder and release conditions
- The sunset date and circumstances in which either party may terminate
- The events that trigger settlement
- Extension and delay provisions
- Inspection, defect and completion procedures
- Finance conditions, if any
- Default and termination rights
- Any body corporate, management or letting arrangements
The seller may have an obligation to notify the buyer if information in the original disclosure changes. A buyer may have termination or other rights where a change causes material prejudice, although the requirements and timeframes depend on the applicable legislation and contract.
Do not assume that a difference between the proposed and completed property automatically gives the buyer a right to terminate. Obtain legal advice promptly after receiving any amended disclosure or notice of change.
Protections depend on the type of contract
Queensland law restricts the early release of deposits paid under off-the-plan contracts. The money is generally held in an appropriate trust account until settlement or until the contract otherwise ends and the seller becomes entitled to it.
This provides protection against the seller using the deposit during construction. It does not remove every risk associated with delay, termination, default or developer insolvency.
A sunset clause identifies an event or date connected with settlement and may state when a party can terminate if that event has not occurred.
The restrictions introduced in November 2023 limit when a seller can use a sunset clause to terminate particular off-the-plan land contracts. These restrictions do not apply in the same way to proposed lots in community title schemes such as apartments or to every house and land arrangement.
For off-the-plan land contracts covered by the Land Sales Act 1984, a seller may generally terminate under a sunset clause only with the buyer's written consent, under an order of the Supreme Court or in another circumstance prescribed by regulation. Ask a solicitor whether these protections apply to the particular contract.
Time can change the property and the buyer's position
There may be a substantial period between signing and settlement. During that time, construction, the property market, lending requirements and the buyer's circumstances may change.
Consider:
- Which approvals have been obtained and whether any development or finance conditions remain before the project can proceed
- The seller's ability to extend anticipated completion dates
- How variations to plans, dimensions, materials or finishes are handled
- Whether the buyer can inspect before settlement
- How incomplete work and defects are recorded and addressed
- What happens if the lender's valuation is below the contract price
- Whether a current finance approval will remain valid
- Whether changes to income, expenses, interest rates or lending policy may affect borrowing capacity
- What additional funds may be required at settlement
- How rates, body corporate levies and other outgoings will be adjusted
A finance approval obtained when the contract is signed may expire before settlement. Confirm the lender's requirements and understand how a lower valuation or changed financial circumstances could affect the funds required to complete the purchase.
What to investigate before signing
The property cannot yet be assessed in the same way as an established home. The enquiries should instead focus on the contract, project, seller, approvals and proposed finished property.
Developer and project
Consider the developer's completed projects, current projects, relevant experience and corporate structure. Check available company, insolvency and court records, along with the licence details of the builder responsible for the work where known. Past performance does not guarantee completion, although it may identify matters requiring further investigation.
Planning and building approvals
Confirm the approvals already obtained, any approvals still required and whether the proposed use, design and common facilities are consistent with the documents provided.
Plans and specifications
Review dimensions, orientation, parking, storage, finishes, appliances, services, common property and any permitted substitutions or variations.
Body corporate information
For a proposed community title scheme, review the proposed community management statement, estimated budgets, contribution lot entitlements, proposed levies, insurance assumptions and any management or letting agreements available.
Estimated body corporate costs may differ from actual costs once the scheme is operating.
Finance and valuation
Discuss the proposed settlement timing, future valuation and finance requirements with the lender or mortgage broker. Avoid assuming that current approval or market value will remain unchanged.
Legal, tax and duty advice
Ask a Queensland solicitor or law practice to review the contract and disclosure material. Obtain qualified tax and duty advice where the purchase structure, intended use or buyer's circumstances require it.
Foreign buyers
A foreign person may require approval or an exemption before entering into the purchase contract and may face additional tax or duty consequences. Confirm the requirements before signing.
Questions to ask before committing
Before signing, make sure you understand the property being promised, what may change and what will be required at settlement.
What documents form part of the contract?
Confirm which plans, specifications, schedules, finishes and inclusions the seller is contractually required to provide.
What may the seller change?
Understand the variation rights affecting dimensions, layout, materials, appliances, common property and services.
What is the sunset date?
Ask what event the sunset provision relates to, who may rely on it and which legislation applies to the contract.
When can settlement be required?
Understand the notice period, settlement trigger and what must occur before settlement.
How is the deposit held?
Confirm the deposit holder, trust arrangements and circumstances in which it may be released or forfeited.
What happens if the project is delayed?
Review extension rights, notice requirements and the remedies available to each party.
What happens if the disclosure changes?
Ask when the seller must notify you and what rights may arise if the change causes material prejudice.
How will the completed property be inspected?
Confirm the inspection process, defect procedure and whether an independent inspector can attend.
What happens if the valuation is lower?
Understand whether the contract contains a finance condition and how additional funds would be provided if required.
What will ownership cost?
Consider rates, insurance, body corporate levies, maintenance, management arrangements and other ongoing costs.
Check the completed property and final documents
As settlement approaches, obtain the documents and professional advice needed to confirm what has been completed and what remains outstanding.
Depending on the property, this may include:
- Updated disclosure documents
- Registered title and survey information
- Approved plans and final building documentation
- Inspection certificates and compliance records
- Body corporate registration and final scheme documents
- Current levy and insurance information
- An independent inspection of the completed property
- A written defects list
- Confirmation of finance and valuation
- Settlement adjustments and the final amount required
Completion does not necessarily mean every defect has been resolved or every document has been issued. Ask the solicitor, inspector and other advisers what should be confirmed before settlement under the particular contract.
An off-the-plan purchase depends on what the contract requires the seller to deliver and what rights the buyer has if the project, disclosure or timing changes.
Careful review before signing allows the contract, proposed property, finance and settlement obligations to be considered together rather than relying on marketing material or future price expectations.