Buying an off-the-plan property in NSW involves unique risks because the final property may differ from the plans, finishes or documents provided at the time of purchase. To improve transparency and protect buyers, NSW introduced reforms affecting off-the-plan residential property contracts.
The reforms amended the Conveyancing Act 1919 (NSW) and the Conveyancing (Sale of Land) Regulation 2017. They introduced additional disclosure obligations for developers and expanded certain rights available to purchasers.
If you are considering purchasing an off-the-plan apartment, townhouse or residential development, understanding these changes can help you make an informed decision before signing a contract. Our property conveyancing lawyers can review your contract, explain your rights and identify potential risks before exchange.
You can also review the current requirements under the Conveyancing (Sale of Land) Regulation 2017 (NSW).
What changed for off-the-plan property contracts in NSW?
The reforms introduced several important protections for purchasers, including:
- additional disclosure documents before signing an off-the-plan contract;
- notice requirements when developers make significant changes;
- new rights to claim compensation or terminate in certain circumstances;
- a longer cooling-off period for eligible off-the-plan purchases; and
- restrictions on early release of deposits and instalments.
These changes aim to ensure buyers understand what they are purchasing and have greater protection if the final development differs from what was originally disclosed.
Additional disclosure requirements for off-the-plan contracts
Off-the-plan contracts often involve properties that do not yet exist. Buyers usually rely on plans, descriptions and developer information when deciding whether to proceed with the purchase.
To improve transparency, vendors must attach an approved disclosure statement and prescribed documents to the contract before the purchaser signs it.
The disclosure statement provides important information about the proposed development, including:
- the sunset date for completion of the development;
- whether the development has received approval;
- conditions affecting the development;
- important contract clauses relating to changes and purchaser rights.
Documents that must accompany an off-the-plan contract
The required disclosure documents depend on the type of property being purchased. They may include:
| Document | Purpose |
|---|---|
| Draft plan prepared by a registered surveyor | Shows the proposed lot, location, size, easements and restrictions affecting the property. |
| Draft floor plan | Provides details about the layout of a proposed strata lot. |
| Location plan | Shows where the property sits within the development. |
| Schedule of finishes | Outlines proposed materials, fixtures and finishes for the property. |
| Draft by-laws or management statements | Explains rules and obligations that may apply to owners after completion. |
Other disclosure documents may include:
- proposed section 88B instruments;
- draft strata by-laws;
- draft management statements;
- development contracts for community, precinct or neighbourhood schemes;
- building management statements where relevant.
What happens if disclosure documents are missing?
If a vendor does not provide the required disclosure statement and attachments before the purchaser signs the contract, the purchaser may have a right to rescind the contract within 14 days after exchange.
These disclosure obligations operate alongside other requirements that apply to NSW residential property contracts.
What happens if a developer makes changes to an off-the-plan property?
During construction, developers may need to make changes to a property due to planning requirements, engineering issues or practical considerations. However, some changes may significantly affect a purchaser’s decision to proceed with the purchase.
The NSW reforms provide additional protections when a developer makes a change that affects a material particular disclosed in the contract.
What is a material particular?
A material particular is an important detail about the property that could affect the purchaser’s use, enjoyment or decision to buy the property.
Examples of material particulars may include:
- changes to the draft plan;
- changes to proposed by-laws;
- changes to the schedule of finishes;
- new easements affecting the property; and
- new covenants restricting the use of the land.
If a developer makes a change that affects a material particular, the vendor must provide the purchaser with notice in the approved form.
Can a buyer cancel an off-the-plan contract after changes?
A purchaser may have the right to rescind the contract if they can show they have been materially disadvantaged by the change and would not have entered into the contract if they knew about it earlier.
Alternatively, the purchaser may choose to complete the purchase and claim compensation. Compensation is generally limited to a maximum of 2% of the purchase price.
Purchasers must exercise these rights within the required timeframe, which is generally 14 days after receiving notice of the change or the registered plan revealing the change.
Minimum settlement notice period for off-the-plan purchases
Before settlement occurs, the vendor must provide the purchaser with a copy of the final registered plan at least 21 days before settlement.
This timeframe allows buyers to review the final plan and consider whether any changes affect their rights under the contract.
If the final registered plan reveals a material change, the purchaser may still have rights to seek compensation or terminate the contract depending on the circumstances.
Cooling-off period for off-the-plan property contracts in NSW
Residential property buyers in NSW generally have a five-business-day cooling-off period after exchanging contracts. However, off-the-plan purchases receive an extended cooling-off period.
For eligible off-the-plan residential contracts, the cooling-off period extends to 10 business days.
During this period, purchasers can consider the contract and seek legal advice before deciding whether to proceed.
If a purchaser exercises cooling-off rights, they must provide written notice within the required timeframe and will usually forfeit 0.25% of the purchase price.
Vendors must also ensure the required cooling-off warning notice appears in the contract.
How are deposits and instalments handled under off-the-plan contracts?
The reforms introduced additional protections for purchaser funds by requiring deposits and instalments paid under an off-the-plan contract to remain in a trust account or controlled money account until completion.
Developers cannot access these funds early unless permitted under the relevant legislation.
This requirement helps protect purchasers by ensuring money paid towards the purchase remains secure until settlement takes place.
Frequently asked questions about off-the-plan property contracts NSW
What is an off-the-plan property purchase?
An off-the-plan purchase involves buying a property before construction has finished, or sometimes before construction has started. Buyers rely on plans, specifications and contract documents when making their decision.
Do off-the-plan buyers have extra protections in NSW?
Yes. NSW reforms introduced additional disclosure obligations and purchaser rights, including protections relating to material changes, settlement notices and deposits.
Can I negotiate an off-the-plan property contract before signing?
Yes. Buyers can negotiate contract terms and seek legal advice before exchange. Once contracts exchange, changing the terms can become much more difficult.
Should I have a lawyer review an off-the-plan contract?
Yes. Off-the-plan contracts can contain complex clauses dealing with construction changes, settlement dates, variations and purchaser obligations. A property lawyer can identify risks before you commit to the purchase.
Protecting your interests when buying off-the-plan
Off-the-plan property purchases involve unique legal considerations. Reviewing the contract, understanding disclosure documents and obtaining advice before exchange can help buyers make informed decisions.
Our experienced property conveyancing lawyers can assist with contract reviews, searches and advice throughout the purchase process.
This article provides general information only and does not constitute legal advice. You should obtain advice about your specific circumstances before taking action.
If you need assistance with an off-the-plan property purchase, contact us on (02) 9818 2888 or email [email protected].