Understanding the Legal Details in Off-the-Plan Property Contracts: What Every Buyer Should Know

Buying an off-the-plan property — whether it’s a new apartment, townhouse, or home in a yet-to-be-built development — can be an exciting way to secure your place in Australia’s property market.
You get a brand-new property, often with time to save before settlement. But beneath the promise of convenience and value lies a complex legal contract filled with clauses that can significantly affect your rights as a buyer.

At IAT Lawyers, we help clients review, understand, and negotiate off-the-plan contracts to ensure they are fully protected before signing.
Here’s what you need to know about the key legal details, risks, and protections in an off-the-plan purchase agreement.

What Is an Off-the-Plan Property Contract?

An off-the-plan contract is a legally binding agreement to purchase a property that has not yet been built or is still under construction.
You agree to buy the property based on architectural plans, specifications, and marketing materials — not a completed dwelling.

While this approach offers flexibility and investment potential, it also involves unique legal risks that standard property contracts don’t.

1. The Sunset Clause — Know When the Developer Can Cancel

The sunset clause is one of the most critical parts of any off-the-plan contract. It specifies the maximum time allowed for the developer to complete the project and register the property title.

Why It Matters

If the project is delayed beyond this date, the developer (or sometimes the buyer) may have the right to terminate the contract.
However, some developers have historically used this clause to cancel contracts when property prices rise — reselling at higher prices.

Buyer Protection Tip

Recent law reforms in several states (like NSW and VIC) now require developer consent from buyers or court approval before using the sunset clause to terminate.
Still, always check:

• The sunset date and any extension rights.
• Whether the developer needs your written consent to terminate.
• If compensation is payable if the contract ends.

Having your lawyer review this clause ensures you’re not exposed to unfair termination.

2. Settlement Date and Completion Timing

In off-the-plan purchases, settlement doesn’t occur until construction is completed and the title is registered — which can take months or even years.

Key Considerations

• The estimated completion date is not guaranteed.
• Settlement is often triggered by a “Notice of Settlement” once the developer obtains an occupancy certificate.
• You must be financially ready, even if timelines shift.

Buyer Protection Tip

Ask your lawyer to:

• Review how much notice the developer must give before settlement.
• Check if extensions or delays are permitted, and under what circumstances.
• Negotiate clauses that protect you if delays exceed a certain period.

3. Changes to Design, Layout, and Finishes

It’s common for developers to reserve the right to modify design specifications — from floor layouts to materials — during construction.
While some changes are minor, others can impact the property’s value or livability.

Why It’s Risky

Without clear limits, the developer may:

• Change apartment layouts, reducing usable space.
• Substitute cheaper fixtures or finishes.
• Alter common areas like car parks or storage.

Buyer Protection Tip

• Review the “Variation Clause” carefully.
• Ensure the contract limits allowable changes to non-material alterations.
• Require written notice and consent before significant modifications.

At IAT Lawyers, we often negotiate to include wording that ensures buyers are notified and compensated for any substantial design variations.

4. Strata Titles and Common Property Rights

Off-the-plan apartments and townhouses are usually part of a strata title scheme, meaning you share ownership of common areas (like lifts, hallways, and gardens).

Legal Details to Review

• By-laws: Check rules for parking, renovations, and pet ownership.
• Strata levies: Understand expected maintenance fees and sinking fund contributions.
• Management rights: Ensure the developer doesn’t retain long-term control through a management company.

Your property lawyer can review the draft strata plan to ensure your ownership rights are fair and transparent.

5. Finance and Valuation Risks

Since settlement may be years away, lenders usually won’t provide final loan approval until the project is near completion.
This means your financial situation, interest rates, or market values may change significantly before settlement.

Common Issues

• The property’s final valuation may come in lower than your original purchase price.
• You might struggle to meet new lending requirements.
• If you can’t settle, you risk losing your deposit and facing legal action.

Buyer Protection Tip

• Obtain pre-approval, but review it regularly during construction.
• Keep savings or backup financing options ready.
• Have your lawyer confirm deposit release conditions to ensure funds are held safely in trust until settlement.

6. Defects and Warranties After Completion

Even brand-new properties can have defects — from cracks and leaks to faulty appliances.
Fortunately, most states provide statutory warranty protections for buyers of new residential developments.

Buyer Protection Tip

• Conduct a pre-settlement inspection with a qualified building consultant.
• Keep records of all identified defects and notify the developer in writing.
• Confirm your defects liability period and the process for rectification.
• Ask your lawyer to check if the builder provides insurance coverage under the Home Building Compensation Scheme (or equivalent in your state).

7. Cooling-Off Period and Legal Review

Most off-the-plan contracts include a cooling-off period (typically 5 business days), allowing buyers to withdraw after signing — with a small penalty.
However, this period can sometimes be waived or limited, depending on how the contract is executed.

Buyer Protection Tip

Never sign an off-the-plan contract without a full legal review.
Your lawyer will:

• Identify unfair terms or ambiguous clauses.
• Explain your rights to withdraw or amend.
• Ensure the developer complies with all disclosure obligations under state law.

‍