Key Takeaways
- Off-the-plan purchases lock in today’s price but carry unique legal risks.
- Quality and finishes can differ from what was promised, with limited recourse.
- Finance approval is usually only secured near settlement, leaving buyers exposed.
- Developers may delay completion or make significant changes after contracts are signed.
- A thorough legal review is essential to protect your interests.
Off-the-plan purchases, buying a property before it’s built, continue to attract both first-home buyers and investors in New South Wales. The appeal is clear: locking in a property at today’s price, accessing brand-new builds with modern features, and in some cases, benefiting from stamp duty concessions or tax incentives.
For home buyers, the glossy brochures and display suites look enticing, but the legal risks involved in off-the-plan contracts are often understated. Before signing, it’s important to understand the red flags and protect your interests.
1. Quality and Workmanship – You Can’t See What You’re Buying
One of the biggest risks with off-the-plan purchases is that you’re buying a property that doesn’t yet exist. Until construction is complete, you won’t know if the workmanship, layout, and finishes match what was promised.
Key risk: Many buyers discover at settlement that the property does not meet expectations, yet they are still contractually bound to proceed at the agreed price. If the final product differs significantly in layout, finishes, or materials, its market value may be lower than what you’re required to pay.
2. Finance Considerations
While the purchase price is locked in at exchange, finance approval usually isn’t secured until closer to settlement. This creates several challenges:
- If you’re relying on the sale of another property, a market downturn could reduce your available funds.
- Mortgage approval may be delayed until construction is nearly complete. Changes in your income, employment, interest rates, or lending criteria could reduce your borrowing capacity.
- If the bank valuation is lower than your contract price, you’ll need to cover the shortfall in cash.
Tip: Speak with a mortgage broker or adviser early, and plan for potential valuation gaps or changes to borrowing capacity.
3. Delayed Completion and Uncertain Timing
Settlement depends on several factors:
- Construction completion
- Registration of the strata plan
- Issue of the Occupation Certificate
All of these can be delayed due to weather, funding, compliance issues, or building defects. Contracts usually include a sunset date, a final deadline for completion. However, many contracts allow developers to extend this date, leaving you uncertain of when settlement will occur.
Red flag: If you’re planning to move in, rent out, or end a lease around settlement, delays can be costly and disruptive.
4. Changes to the Development After Exchange
Off-the-plan contracts often give developers the right to vary designs, layouts, or specifications. While intended to allow flexibility, these clauses can leave buyers with a very different property from what was originally promised.
Legal risk: Unless the contract allows termination for material changes (like reduced size, missing features, or downgraded finishes), you may have limited recourse.
Best practice: Ensure your contract limits the developer’s right to make variations, or includes a clear threshold for when changes allow you to withdraw. At & Legal, we negotiate these clauses on your behalf to protect your interests.
5. Legal Review Is Essential
Off-the-plan contracts are often lengthy, complex, and heavily in favour of the developer. Critical clauses to review include:
- Sunset clause rights and timeframes
- Variation rights (plans, finishes, inclusions)
- Termination rights
- Completion triggers and delay provisions
- Default consequences
- Dispute resolution processes
Never sign an off-the-plan contract without a property lawyer reviewing it first. In many cases, terms can be clarified or negotiated before you commit.
Final Thoughts
Buying off the plan isn’t always a bad decision. For some, it’s an effective way to enter the market or secure a brand-new property. But it comes with unique risks that require careful due diligence, financial planning, and legal advice.
At & Legal, our property law and conveyancing team specialises in reviewing and negotiating off-the-plan contracts. We’ll help you identify risks, clarify obligations, and make confident decisions before you sign.
Considering an Off-the-Plan Purchase?
Explore our Conveyancing Packages, Essential, Premium, and Elite, designed to provide the right level of support for your property journey. Whether you’re buying your first home or managing a complex investment, we offer transparent pricing, expert guidance, and tailored support.
Contact & Legal today to safeguard your off-the-plan purchase and move forward with confidence.
Frequently Asked Questions
What is an off-the-plan purchase?
It is the purchase of a property before it has been built or completed. Buyers commit to a contract based on plans, specifications, and promotional material.
What are the main risks of buying off the plan?
The main risks include unexpected variations to design and finishes, delays in completion, difficulties securing finance, and reduced property values if the market changes.
How long does settlement take on an off-the-plan purchase?
Settlement occurs once construction is complete, the strata plan is registered, and the Occupation Certificate is issued. This can take several years depending on the project.
Can I pull out if the property is different from what was promised?
This depends on the contract terms. Some contracts allow withdrawal if material changes occur, but many do not. Legal advice before signing can help secure better protections.
Why do I need a lawyer for an off-the-plan purchase?
These contracts are lengthy and heavily weighted in favour of the developer. A lawyer ensures the terms are fair, negotiates protections, and explains your obligations so you are not caught out at settlement.