Buying a Home

Before you buy

Buying a home is a major financial investment - investigate your purchase carefully.

Research the area where you intend to buy. If it's unfamiliar, contact the local services, climate, topography and local problem spots like contaminated and flood-prone land.

Prioritise your essential needs. Is it important to be close to transport, schools, shops and emergency services such as police, fire or ambulance? Is this the right area for you? What size property is appropriate for your family?

If you decide to buy a home unit or townhouse (a property in a community titles scheme) you should be aware that you are buying into a community lifestyle with shared responsibilities and liabilities.

How much can you afford to pay? Consult financial institutions or finance brokers. Many lenders offer pre-approved loans, so you know what you can afford before you look at property.

Shop around to get the best finance deal.

Set aside additional funds to pay for legal fees (including mortgage insurance and mortgage documentation), stamp duty, removalists, security deposits and connection fees for essential services such as electricity and telephone. Also allow for the cost of a formal valuation and a building and pest inspection.

Building, pest and swimming pool inspections will cost between $400 to $500 depending on the type and size of the property.

Find out what the different inspections will include. Also make sure you understand what items will not be covered in the inspection report.

Research current market values of property in your chosen area. Peruse property listings at real estate agencies, on the internet and in newspapers. Contact the Department of Natural Resources and Mines for sales data from the area. Visit open house inspections to compare values of properties in the area.

Ask a reputable real estate agent for market information. See who is most active in the area where you wish to purchase and check them out at houses open for inspection. Ask friends and colleagues for referrals.

Never buy property unseen - what you 'see' may not be what you get. This is particularly important if you are purchasing through the internet or an investment club or timeshare opportunity. Always inspect the property personally or have a trusted friend inspect on your behalf.

Q. Should I buy privately? I could save money.

A. It takes a significant amount of time and effort, is a complex transaction that ought to have legal and valuation advice, and unless you are buying through an agent, you aren't covered by the Property Agents and Motor Dealers Act 2000. You would need to seek any private civil action for any problems you encounter.

Choosing the right property

The design of the home, how it functions and how it complements your lifestyle should be a major decision-making factor when buying a property. This way, you will end up in a home that will accommodate your needs now and for many years to come that can also save you money. Too often, people fall in love with the 'look' of a home without considering how it will function. If you are aware of the impact that design features have within a home, you will be able to choose a home that is easy to maintain, efficient to run and will suit your lifestyle as your needs inevitably change.

The importance of smart housing design

James, Judy and their family recently relocated to Brisbane to take advantage of the Queensland Climate, relaxed lifestyle and a housing market that was less than expensive than southern markets. Long-term, they were looking to buy their dream home but in the meantime, the family would rent until the right house came along. Approaching his local real estate agent, James was armed with a list of 'must-haves' for the new home - a spa bath, an internal staircase and a media room among the features.

Interestingly, after several months in a rental home, James and Judy began to re-prioritise the features they wanted in their dream home. They began to realise that some of the basic design features in the rental house were not working for their family. For example, their three-year-old son was forever climbing the balustrade on the deck and an accident was just waiting to happen. James' elderly parents found visiting the family difficult because there were so many stairs to climb. Judy often complained the house was hot and stuffy during the day and the need for airconditioning meant the energy bills were huge.

James and Judy began to realise how the design elements within a house impact considerably on lifestyle needs. What's more, they realised their current needs with a young family would be vastly different to their future needs with teenage children or as they got older. With no intention of moving when they found their dream home, they realised a key priority of the new house would be flexibility. It would also have to be cool in summer and warm in winter. It would have to be safe. It would have to be energy efficient. It would have to be functional and look good. In short, it would have to be a Smart House.

The Department of Housing's Smart Housing initiative can guide you. Smart Housing is about simple, common sense housing design. A house that incorporates a range of simple design features and products that have been consciously selected for their benefits makes all the difference to the liveability of a home. Smart Housing uses the balanced approach of sustainable housing to ensure that all the key issues are considered together at the design stage.

There are a range of very simple design features that will work best for you - sustainability features will help you determine what you should look for.

Being an informed buyer and considering simple design principles when buying or renovating a home, will ensure you end up living in a home that is equipped to address the unique lifestyle needs of you and your family. Your home will be efficient, functional, aesthetically attractive and will mean cost savings for you throughout the time you live in the house.

For further information, visit the Smart Housing website at http://www.hpw.qld.gov.au or telephone (07) 3238 3683.

Benefits of sustainable housing

How will a sustainable house work for you?

  • Increased liveability, comfort and peace of mind.
  • Lower expenses and maintenance costs.
  • The option of being able to stay in your home longer, among friends and familiar neighbours.
  • Helping the environment.
  • Improved resale value, your house will meet the needs of more people making it a more marketable property.

Smart Housing sustainability features

Sustainable housing is about choosing features that will best match your lifestyle needs. Smart Housing presents a long list of recommended design features which can be accessed from the Department of Housing.

Some simple features are more important than others. How does your house rate on the 'smart' scale checklist for the most important sustainability considerations?

Efficient water heating could save you up to 80% on water heating bills and subsequently reduce greenhouse gas emissions.

A step-free shower is accessible for people with a wide range of abilities and minimises the risk of tripping.

Sufficient Space and movement as a result of accessible, clear pathways throughout the house. Accessible pathways should service the:

  • kitchen;
  • living room;
  • bathroom;
  • toilet and hand basin; and
  • bedroom.

Water conservation

  • Water efficient appliances and fittings with an AAA or higher water conservation rating.
  • Landscaping that requires little water.
  • A water tank for collecting roof water for use on the garden and for flushing toilets.

The way in which the house addresses the street should clearly define the separation between public, semi-public and private spaces.

  • A prominent, easy-to-read house number to assist visitors and emergency services to locate the house.
  • A well-defined and separate driveway and pedestrian entries that are clearly visible from the street or from neighbouring properties.
  • Good external lighting for security and surveillance purposes.
  • An accessible, step-free entrance that can be managed by a range of people including the elderly, parents with a pram or a furniture removalist.
  • The house fits in with the street and neighbourhood.

Good passive design makes use of the sun and wind to increase the thermal comfort of the home, reducing the need for artificial and expensive heating and cooling devices.

Key passive design features include:

  • house orientation for breezes and solar access;
  • thermal mass versus lightweight construction;
  • cross-ventilation;
  • insulation;
  • wide eaves to shade external walls; and
  • window shading.

Safer floors

  • Slip-resistant, especially in wet areas, to minimise the risk of falls.
  • Not highly polished because of the risk of slipping.
  • Highly durable.
  • Able to be easily cleaned.

Outdoor living

  • At least one covered outdoor play or entertainment area has effective sun-shading.
  • Covered outdoor space with a minimum area of 12m2 for a house and 9m2 for a unit.
  • A good relationship to the indoor living space.

Long-term maintenance

  • The design of the house considers the maintenance requirements and life expectancy when selecting building materials, fittings and appliances.
  • There is easy access to items that require regular maintenance or inspection.
  • Low maintenance materials are used in areas which are difficult to access.

Casual surveillance for safety and security purposes.

  • There is easy surveillance of play areas from the kitchen or main living areas.
  • The design allows for surveillance of the street and adjacent public open space from the main living areas.

When you are ready to buy

Ask to see the real estate agent's licence (it should be clearly displayed at the place of business). If you are dealing with real estate agents, auctioneers, property developers or their sales consultants, they must achieve the best price and terms for the property owner - not you. Unless you appoint the agent (a buyer's agent), the agent acts for the seller and no matter how approachable, friendly or cooperative they appear, they are not working for you.

Buyer's agents

You may wish to appoint a buyer's agent to represent your interests in negotiations (see Forms Page). A buyer's agent can locate and negotiate the purchase of a property on your behalf. They conduct background checks on the property and area to ensure you paid the fairest price. Please note you would have to pay a fee for this service.

Q. Why would I use a buyer's agent?

A. To simplify your transaction and to save you a significant time and effort in the search for appropriate properties which meet your specific needs. Buyer's agents have expertise in price negotiations and have an obligation to achieve the best deal or 'lowest possible buying price' for you. You would be expected to pay a fee for these services which you should factor into the total cost of buying the property.

Titles searches, checks and pest and building inspections

Buyers should always conduct their own independent title searches, local government checks and pest and building inspections. Check with the local council if the property has any restrictions such as the use of vacant land (eg. are you allowed to relocate an existing house on to the block or can you only build from new?) or any registered dealings or easements over the property that could reduce its value, use or access. In many older suburbs and undeveloped former bushland converted to estates there can be problems over uncertain boundaries. Check that features such as deck, garage, shed or pool comply with local council regulations or building standards.

For your peace of mind, you can carry out a search of the property's title for a small fee at any time to confirm the current details lodged in the land registry. This way you can check the details of any easement, caveat or other interest, registered against the title before you sign. More information can be found at www.nrm.qld.gov.au/property.

Further, consider getting a physical survey by a qualified person (land surveyor) before you sign a contract for the purchase of a property. A physical check is the only way to fully check the property's boundaries and registered land title information are correct (i.e. confirms the property you are considering buying is as described and the one identified on the contract). Land titles are paper records of what the boundaries should be, but mistakes can happen and over the years renovations and extensions to your proposed property and neighbouring properties may mean that what you get is not what is listed on the records.

Undertake building and pest inspections before negotiations commence so you know exactly what condition the property is in and what needs to be spent on it. This will increase your bargaining power. Don't rely on the provision in the standard land contract for the sale to be subject to a satisfactory building and pest inspection.

Ensure your building inspection is conducted by an independent Building Services Authority (BSA) licensed certifier. Be aware the builder's own inspection, not the local council, is responsible for building compliance inspections. Buyers should also investigate appropriate statutory warrants for new buildings and procedures for making claims within the warranty period.

Community Living

When you buy a property in a community titles scheme (such as a townhouse or home unit) you buy into a community lifestyle with shared responsibilities and liabilities.

Investigate the affairs of the body corporate, its sinking fund and your obligations to pay body corporate levies (including any known plans to increase levies in the immediate future).

Check for safety features

While you are looking at the features of your potential new home, take a minute to look in the switch box for a safety switch. You should be able to distinguish it from the circuit breakers or fuses by its larger size and the presence of a test button.

All homes built after July 1992 are required by law to have a safety switch installed on both power and light circuits, but it is a legal requirements for the buyer to install a safety switch on all homes bought since October 2002 within three months of the settlement, unless one is already installed.

If there is one on the switchboard it could save you around $200. If not, then you should budget for a licensed electrical contractor to install one.

Be aware when you're inspecting the house also of any other safety related features which may need to be fixed up if you purchase, such as dangerous blind cords. For more information on Safety around your home, get a free copy of the Office of Fair Trading's Consumerwise and About Baby & Children's Safety publications, and download fact sheets from www.fairtrading.qld.gov.au or call 1300 658 030.

Negotiating a fair price

Ask if the seller wants a short or long settlement. Finding out why the seller is moving, e.g. to build a new home, move interstate or upsize or downgrade, can be a useful indicator as to whether they need to settle fast or are willing or able to negotiate price. This information can assist you later on in negotiations on an attractive offer to the sellers. However, the agent is not obliged to inform you of these reasons if they need to respect the sellers privacy.

New or old - make sure the builder is licensed

If you are building a brand new house, renovating an existing property or purchasing a house and land package, shop around to ensure you are getting a good deal. If you are purchasing a house and land package ensure any variations regarding product inclusions or prices are listed on the contract. Obtain a land valuation to ensure this is the case and get quotes from a number of Building Services Authority (BSA) licensed builders to ensure the building quote is value for money. A free online licence search is available from www.bsa.qld.gov.au to check BSA licensees records as well as other valuable information for consumers thinking of building or renovating a property.

Q. Are new buildings covered by a statutory home warranty insurance?

A. Provided the new domestic building was constructed by a Building Services Authority (BSA) licensed builder, Queensland consumers are protected for six years and six months in cases of major structural problems or six months in the cases of cosmetic defects. However, houses or renovations constructed by owner builders do not enjoy the benefit of this protection.

Getting ready to sign a contract

Before you sign the contract, make sure all the items to be included in the sale are actually included in the contract. The standard terms of the contract will provide for all fixtures and fittings (ant item that is glued, bolted, screwed, joined, nailed or plumbed into the property) to be sold with the property unless otherwise specified under 'exclusion' to the sale.

Real estate agents and developers in Queensland often prepare their own contracts. It is also common practice for the outcomes of all negotiations to be put in writing in a contract rather than undertaken orally.

When you are ready to sign a contract, take a copy away and discuss it with your solicitor, especially if you will be making an offer on the property subject to certain conditions such as finance or the sale of another property. Once you sign the contract and it is signed by the seller, it becomes binding.

All residential sales contracts must have a Warning Statement (PAMD Form 30c) as the front Page (See Forms Page). Follow the advice in the warning statement recommending you seek independent legal advice and valuation before you sign the contract.

Q. Why should I sign the Warning Statement PAMD Form 30c?

A. To indicate you have received it and read it. It is more important that you have read the document and considered the advisory statements about obtaining legal and valuation advice.

Make sure your solicitor provides you with a completed Lawyers Certification PAMD Form 32a, unless you are buying residential property sold at auction.

The form requires lawyers to disclose to you any relationship with, and benefits received from, people involved in the sale, promotion of the sale or provision of a service in connection with the sale of a property. Lawyers must also disclose the nature and value of the benefit. This same form can also be used to shorten the cooling-off period for the purchase of your property.

When you are ready to sign

It is wise to investigate and appoint your own independent service providers, such as solicitors, valuers, finance agents and building and pest inspectors. Check with your service providers that they are not associated with the agent or the seller. It is common for agents and developers to refer you to these services, however you have no guarantee of their independence in the transaction.

Agents and developers are required to provide a buyer with certain contract disclosures. For instance, you must be informed if the agent or any other party is receiving any benefit from the transaction, such as commissions or referral fees or if they have a personal or business relationship (see Forms Page).

All community title scheme contracts must also have as their first page a Warning Statement (PAMD Form 30c) and as its second page an information sheet which outlines matters to consider when buying a community titles property and the rights and responsibilities of a property owner (Body Corporate Community Management Form 14).

Before the contract is signed by both you and the seller, the agreement is usually just verbal and not binding. Up until both parties sign the contract both you and the seller have the right to change your minds.

Don't be pressured into signing a contract unless you understand it fully or have had your solicitor check it for you.

Make sure all alterations made to the contract during negotiations are initialled by the parties to the contract and any special conditions can be fulfilled within a reasonable timeframe.

Paying the Deposit

Once you have put in a Contract of Sale, you may decide to pay a deposit to the selling agent for which you should receive a trust account receipt. You may choose to do this to show the seller that you are serious about purchasing the property. Alternatively, you may not on the Contract of Sale that a certain deposit will be paid, say, within 48 hours of the seller accepting your offer by counter signing and dating the Contract of Sale. Instead of cash deposit you may choose to use deposit bonds, which act as a substitute, between signing the contract and settlement of the property.

If a deposit bond is used, at settlement you are required to pay the full purchase price including the deposit. Acceptance of the bond in lieu of a cash deposit is at the discretion of the seller.

Paying a deposit does not mean that the property is yours or that it gets taken off the market. It only proves to the seller that your offer is serious. The seller or agent can take as many preliminary deposits as they like for the one property, and are free to negotiate with you and other purchasers for a higher offer. Some sellers may insist that offers are only made in writing. If your offer is not accepted, your deposit must be fully refunded.

The Deal

Once your agent submits your Contract of Sale to the seller and it is counter-signed, the deal is official subject to any special clauses in the contract, e.g. subject to finance, or you deciding to exercise your rights to terminate the contract within the cooling-off period.

Under Queensland's standard contract terms, the buyer carries the risk of the property from 5pm the next working day after signing the contract so ensure you have taken out an appropriate insurance cover note to legally protect you if the property is destroyed or someone is injured (see Home Insurance).

It is wise to appoint a solicitor to undertake your conveyancing as legal issues may affect the sale. Consider getting a physical surveyancing check by a qualified person before you sign to ensure the accuracy of the title and property boundaries.

Cooling-Off Period

Contracts for residential property not sold by auction have a cooling-off period of five business days so that you can evaluate your purchase. If you're not totally happy, you can cancel the contract within the cooling-off period.

The five-day cooling-off period starts the day you receive a copy of the residential property contract signed by both you the buyer and seller, if that day is a business day. If that day is not a business day (ie. Sunday or a Public Holiday) then the cooling-off period will commence on the next business day.

The cooling off period ends at 5pm on the final day of the cooling-off period, e.g. if you receive a signed and dated contract at 6pm on a Sunday, then the first day of the cooling-off period shall be Monday. Therefore, the cooling-off period will end at 5pm Friday next occuring, subject to their being no public holidays on or between the start and end of the cooling-off period.

If you wish to shorten or forego the cooling-off period, ask your solicitor to issue you with a certificate, Lawyers Certification PAMD Form 32a (see Forms Page). Carefully consider the risk you take by shortening the cooling-off period.

If you want to cancel the contract during the cooling off period, write a letter to the property developer or agent and deliver it before the period ends. You will be refunding your deposit less an amount up to 0.25% of the purchase price of the property.

Cool off when buying residential property

Daniel and Amanda were looking for their first home. It had taken them a long time to save up for the deposit, and they were just waiting for the go ahead from the bank for the loan. They had been searching the web scanning all the new homes that were up for sale, so when the bank approved their loan, they already had a $250,000 house picked out that the wanted to buy.

However, 3 days after signing the contract to buy the house, and paying a 10% deposit (25,000) they found a better property that met all of their needs. That day they notified the real estate agent in writing that they wanted to make use of the cooling-off period and be let out of the contract and have their deposit refunded immediately so they could place it on the new property.

Luckily the couple was still within the 5 day cooling-off period so the sale could be cancelled, but were shocked to find the full deposit would not be refunded immediately. The seller rightfully kept 0.25% of the purchase price ($625) before refunding the remainder of the deposit paid ($24, 375) within 14 days of the termination notice allowed under the Act. Daniel and Amanda had not fully read PAMD Form 30c which gives warning that the seller may deduct a termination penalty of 0.25% of the purchase price. It is vital to read and understand all of the contract and warning statement, and to get independent legal advice before signing.

Daniel and Amanda were glad they were able to back out of the contract using the cooling-off period, as although it cost them $625, it was better than having to buy a house they didn't want.

After the Sale

Once the sale has been processed, it is important to confirm that the details lodged with the land registry in the Department of Natural Resources and Mines are correct. You can ask for a Registration Confirmation Statement from the land registry or form your solicitor, usually within seven working days of lodgement. The statement confirms that your title has been formally recorded in the land registry and confirms the current owners and interests recorded in the register.

For your peace of mind, you can carry out a search of your title for a small fee at any time to confirm the current details held in the land registry. This lets you check that the details of the mortgage, easement, caveat or other interest, registered against your title are correct.

More information about property titles at www.nrm.qld.gov.au/property.

Also, request an inspection of the property a couple of days prior to settlement to check the house and make sure you are entirely happy with the condition it is being left in. Check with your solicitor whether all conditions of the contract have been met before settlement.

Be guided by your legal advice whether you can withhold settlement until any problems are fixed.

Settlement Day

Settlement usually takes place between 30 to 90 days from the signing of the contract, but this period can be negotiated.

On settlement day, the balance of the purchase price is paid to the seller in exchange for the title of the property and you can obtain the keys and take possession of the property, unless otherwise arranged.

The final payment is an official process conducted between your and the seller's legal and financial representatives.

At settlement all outgoings such as rates and other charges will be adjusted between you and the seller. The seller is responsible for rates up until and including the day of settlement. You are liable from the day after settlement.

If your new property does not have a safety switch, you are required by law to install a safety switch to power circuits within three months of settlement.

The installation of a safety switch costs about $200 and must be carried out by a licensed electrical contractor. Contractors can be found in your local paper, the yellow pages, by telephoning the contractor's industry association, the Electrical and Communications Association, or your electricity supplier. You should also ask to see the contractor's licence before agreeing to any work.

Buying at Auction

Buying at auction requires more research and preparation than a traditional private sale. Before you intend to buy at auction, attend a few auctions to familiarise yourself with the process.

The terms of a residential auction sale usually require the buyer to bid on an unconditional basis. This means you cannot have any special conditions such as subject to finance or subject to completion of another sale. You do not have the protection of a cooling-off period. It is essential that you view the property and carry out all necessary checks such as title, building inspection, pest reports, etc before bidding. If you are the successful buyer, you could be required to settle the contract even if the house is defective or you cannot afford it.

If you need to arrange finance or a building or pest inspection, do this before the auction. Arrange a 10% deposit (or an amount otherwise agreed) for payment at the auction. A personal cheque, bank cheque or deposit bond is usually sufficient.

Under certain circumstances you can request that specific conditions apply to the auction, eg. the terms of the auction are 10% deposit and a 30 day settlement. Another example is, if you only wish to pay a 5% deposit and settle in 60 days, you can request a variation to the terms of sale before auction.

Bear in mind that the auctioneer is working for the seller and it is the seller's instruction/conditions which will prevail. If the owner agrees you should get this in writing, and you may then bid at auction. A property can be sold or withdrawn prior to auction.

You can seek legal advice regarding the conditions of the auction to ensure you understand the terms and conditions of what you will be bound by if you sign the contract at auction.

You must be given a copy of the terms and conditions of the auction sale at the commencement of the auction. They should also be read out to prospective bidders. Check with the auctioneer on the day to make sure there are no changes to any contract you may have been given initial for your solicitor to peruse and the final version. You have the opportunity to ask questions of the auctioneer or the sales consultant regarding the property before the bidding commences.

Set a bidding limit prior to auction and stick to it.

In Queensland auctioneers are allowed to accept 'vendor' (seller) bids up to the reserve then it is 'on the market'. It is illegal for auctioneers to engage in dummy bidding or take false bids once the property is on the market. Any bid where there is no genuine bidder is a false bid.

Vendor bids must be announced in the conditions of sale at the beginning of the auction that the auctioneer reserves the right to bid on behalf of, or accept, bids from the owners of the property.

If you are the successful bidder, you must sign a contract immediately. There are serious legal ramifications if you cannot settle the sale on time. You may be forced to pay the amount of your winning bid, regardless of whether the loan is approved or access to the money in time, therefore risking not only bankruptcy, but also losing the house and other possessions to pay for your bid.

Make certain that you understand the conditions of the auction, particularly in relation to the deposit and settlement terms before bidding commences.

If you are the highest bidder and the property doesn't reach the reserve you usually have a right to negotiate after the auction to purchase subject to the condition of the auction. If you agree to accept a contract after auction you do have the five day cooling-off period protection.

Buying "Off the Plan"

Many developments are sold "off the plan". This means that the contract for the purchase of the lot (whether land or a unit in a building) is entered into before the title of the lot is created and a building (which may contain the unit being purchased) is constructed on the lot.

In land developments the sale is often associated with a building contract for the construction of a house, either with the developer or a nominated builder.

The purchase of lots bought "off the plan" is regulated by the Land Sales Act 1984, Body Corporate and Community Management Act 1997 (where a community titles scheme is involved) and the Property Agents and Motor Dealers Act 2000. Other legislation may also apply to the selling process, eg. Trade Practices Act 1974 and the Fair Trading Act 1989.

If you are considering buying a property "Off the Plan", be aware there are several pros and cons compared with buying an existing property, and certain protections exist.

One benefit of buying "off the plan" may be that you have more input into certain design aspects of the home before it is completed which will save you renovating or repainting if you were to buy an existing building.

On the flipside, one major risk is buying your property sight unseen. Although you can view architectural plans and models or visit a display suite, you still cannot actually see the final result until after you've already purchased and the building/your unit is constructed.

Uncertain completion dates for building and therefore 'move in' dates can be a negative, as nobody can ever 100% accurately predict what delays may occur during the building process due to variables such as the weather, reliance on suppliers and other factors.

Further, predicting the highs and lows of the market for the future when the building is constructed can be a gamble as you are guessing about the value of property that has not yet even been built. There have been many cases in the past of people failing to resell "off the plan" properties for the price they purchased them new.

As settlement is usually a significant time after the contract is signed there is no guarantee that the lot's value will reflect the purchase price when settlement occurs. Some buyers enter into "off the plan" contracts intending to "on sell" the lot before settlement to profit from any market increase in the value of the land or unit. However, if there is a market downturn, the lot may not return even the original purchase price.

The two major protections that do exist for buying "off the plan" are:

  • the requirements that monies from purchases "off the plan" be safeguarded in a trust account held by real estate agents, lawyers or public trustee; and
  • time requirements for settlement to ensure that by the end of a maximum specified time period your property will be complete or you would have the right to cancel without penalty.

If buying "off the plan", get a firm date from the developer for when the property will be finished. If a development is not completed you may have your money refunded but find it difficult to purchase an alternative property for a smaller price later on. Seek professional legal advice before signing a contract with the developer.

Please note, if you are dealing with a developer, you cannot make a claim under the claim fund and must pursue any issues civilly or through the Police.

Disclosures

Developers are required to provide you with certain disclosures and advisory/warning statements under the relevant legislation before you sign contracts (see Forms Page). The developer is also required to provide further disclosure if anything changes before settlement. Different types of disclosure apply depending on whether your lot is or will be part of a community titles scheme (CTS), like a unit in a building complex, or is land in a residential subdivision with no scheme involved.

Disclosure documents will contain important information about the lot and any applicable CTS. In a residential subdivision without common property this will include disclosure plans showing the configuration and dimensions of the lot. For a proposed lot in a CTS which is not established, disclosures will include the proposed community management statement (which includes proposed by-laws and lot entitlements), the levies reasonably expected to be payable by the owner of the proposed lot, and information about agreements the body corporate may enter into after establishment of the CTS (such as the engagement of a body corporate manager or a service contractor).

Construction and Design

Be aware that you are buying the lot based on the plans and specification in the contract documents. The lot, as constructed may not be what you imagined, based on the plans and the marketing material provided by the developer. You may not be able to rely on any drawings or illustrations in marketing materials which may be indicative only of what the completed development will look like.

The constructed lot (whether a house or a unit) may vary from the plans and specifications in the documents. "Off the Plan" contracts generally allow the developer to make certain changes to the plans, fixtures and fittings and layout during construction. The developer's fundamental obligation is to provide a lot which is substantially the same as what was promised in the plans and contract. There is statutory protection for you as the buyer if changes cause a significant variation (for land) or material prejudice (material or substantial different between what was described in the contract and what the buyer would receive on settlement). However, you should carefully read the contract and relevant disclosure statement to determine what rights you and the developer have in relation to changes and obtain independent advice.

Often developments involving units in a CTS sold "off the plan" are mixed use developments. The residential components may be only one of a number of different uses in a building. You should look at the environment and understand that you may be sharing it with different uses in the building. There are a range of titling structures that are used in mixed use developments and you should obtain advice from the developer about the impact of these in any building which you are considering buying into.

If you are considering being a lot in CTS, check whether the by-laws create any rights of exclusive use over any part of the common property (for example car spaces or storage areas) and whether the unit's proportion of lot entitlements is appropriate.

Settlement

Settlement of an "off the plan" contract is conditional on creation of title for the lot being sold. Where the developer is also constructing the building, settlement will also depend on completion of construction (as in a unit complex). However you should check that the contract does not require you to take possession before lawful occupation can be given to the developer.

It is not uncommon for settlement period to be lengthy depending on the nature of the development, and contracts usually give the developer a right to extend the settlement date for delays caused by matters beyond its control.

There are statutory limits on the timeframes for a developer to provide a transfer of the title to the lot. These vary depending on whether the sale is of a lot in a CTS or not. There will usually be a sunset date in the contract. Under the Land Sales Act 1984, the developer must provide you with a registrable transfer within 18 months for a residential lot or within 3 1/2 years of the contract date for a lot in a CTS. If the transfer cannot be given in these timeframes you can terminate the contract by notifying the developer in writing.

The deposit (usually 10% of the purchase price) is normally paid when the contract is signed. It may be possible to provide the developer with a bank guarantee or a deposit bond instead of paying cash, depending on the contract. There is a cost associated with issuing a deposit bond or providing a bank guarantee.

Any cash deposit is required to be held in a trust account and cannot be accessed by the developer until settlement.

Developers generally will not allow "off the plan" contracts to be subject to finance for any extended period because of the long timeframes involved. As a result, you may have sufficient funds to complete the contract. You should carefully consider whether your circumstances are likely to change when entering into the purchase. You should not rely on re-selling the property to secure your purchase with a developer (i.e. don't rely on the promise of another party to buy the property from you, because if your on-sale falls through you will be left with a property you may not want and a debt you didn't plan for).

If you do not complete the contract, the developer can forfeit your deposit and may be able to recover any loss on the resale of that lot from you.

Q. What happens if a developer doesn't proceed with a plan that you have already bought into?

A. The developer must fully refund all monies paid to it by buyers. All deposits received from buyers must be banked into a trust account when received, and not touched until settlement so funds should be readily available for refund if required.

Unit Management

Some developments may involve on-site managers and also a letting agent who buyers can appoint to manage their unit. If the development is intended to involve short term accommodation and significant on-site management, the management arrangements may constitute a managed investment scheme under the Corporations Act 2001. Buyers should seek separate advice about these issues.

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