Email this article Download this article

Great Stamp Duty Savings?

We are all accustomed to seeing headlines "Great Stamp Duty Savings - Buy off the Plan Now". Often purchasers are blinded by the thought of saving not insubstantial sums of stamp duty and fail to look at other important issues. This is particularly so when the purchasers are buying for personal use rather than investment.

It must be remembered that when one buys off the plan:

• It is not the same as building the apartment or unit yourself;
  
• You do not have any real control over the quality of construction or the fit out;
  
• Plans and specifications annexed to the contract (if any) may be subject to change;
  
• Fittings and fixtures may be substituted at the discretion of the vendor, often without your consent;
• You are not in the position to ensure that any variations requested by you are completed by the vendor/builder. The vendor/builder may choose not to do the variations or, alternatively, charge an arm and a leg for the completion of the same.
  

As a general rule, the specifications annexed to many off the plan contracts are extraordinarily vague and full of generalisations, for example:

• The carpet may be stated as "premium quality 100% wool carpet". Of what type?
  
• Knobs on cupboards may be described as "selected imported".
• The appliance schedule in the kitchen may merely be described as "imported European".
  

In owner occupied units it is often the case that when the purchaser becomes aware of the quality or standard of the fit out of the unit the purchaser gets upset and consults his or her lawyer. Regrettably, the lawyer is not in a position to insist on any changes in the specifications because the contract has well and truly been signed.

In the light of the above it is essential that the following minimum basic rules be adopted by any prospective purchaser of an off the plan unit:

1. Never (that means never) sign a contract of sale for the purchase of an off the plan unit, or in fact any conveyance, without consulting your solicitor.
2. Ensure that the specifications, designs and architectural drawings are suitably detailed and comprehensive.
3. Ensure that the vendor is obliged to make available to you, the purchaser, a copy of the building contract with the builder and a copy of the builder's insurance policy.
4. Ensure that settlement is not required or cannot take place until such time as evidence can be obtained that the construction works have been completed in accordance with the specifications annexed to the contract.  It has come to my recent attention that a vendor has insisted on settlement for the purchase of an off the plan unit because the vendor had obtained both the required registration of plan and an occupancy permit, obtained from an independent building surveyor, yet the plumbing had not been connected, the garage not constructed and carpets and other fittings not installed.

Finally, you should remember that, unlike building contracts, there is generally neither a mechanism to settle disputes or a retention clause.

Caveat emptor - buyer beware!

Further information and assistance can be sought from Jeffrey Pinch by calling our office on 9670-5000 or by his email  jpinch@mdlaw.com.au