Dear Posters
I have been learning from the pages here about…Thanks
Now about to buy a strata one level unit off plan @ 368K in Maddington, Eastern Suburbs of Perth. My first.
The contracts allow the builder 300 working days, which is nearly 16 months! Plus there is provision for him to take an extension for unforeseen delays (then justify it in writing).
The land sale obliges me to cause the building to be built to good standard by 18 months at latest. If not completed, the the seller (Developer = Cedar Property Group) can force a buyback @ land-cost plus 75% of the value of whatever has been built. The contract with the seller includes charging the property to the seller, to give it some teeth.
There is no mention of what happens by way of remedy or compensation if Builder screws up and takes > 18 months. This concerns me. The builder’s contract also charges the property to the builder until I have paid him out.
I am told he is about to start any day. BTW, it is Danmar homes which seems to have no bad record.
I am being ushered to sign these contracts as if it is all routine stuff, nothing to worry about. But the contracts say I warrant I have relied on no agent’s advice and have fully informed myself.
Am I getting too concerned?
Your concerns are justified. I'd be speaking to my solicitor if I were you.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
I am no expert and will eagerly watch the feedback of others, here are my thoughts.
Firstly it is a little hard to determine exactly what is meant by the above wording, the exact wording as written in the contract documentation is all important. You need a good solicitor (not conveyancer) to tell you the true meaning of the wording.
Investing 'off the plan' does come with greater risk, but generally the money down is less (extended settlements etc). Sadly you cant trust the agent that says it is all standard stuff. Even if it is all standard stuff for off the plan sales you need to understand exactly what this means for you. That is what it means for you and your financial situation if all goes according to plan and what it means for you if it doesnt all go according to plan. (There are many variables in development and even a quality ethical developer and builder can get caught out causing delays). You need to able to withstand the situation in the event that it doesnt go according to plan.. I.e. If it does go to plan you win, If it doesnt go to plan you don't loose!
Remember all documentation is an agreement between two parties and you are well within your rights to ask your solicitor to add in additional clauses or alter existing clauses (now the seller may not agree and thus wont sign so you either have to compromise or walk away) but can be a good way to protect yourself. I.e. I would look closely and your rights and the rights of the developer and builder (if different) in the situation whereby the timeline is not met.
I would be happy for extensions to this date if it were weather or similar (out of builders control) but I would not be happy with just the wording 'unforceen circumstances' as this is grey and could enable them to easily default.
After discussion with the agent, I am just not going to sign the ‘Call Option’ which gives the developer the option of taking back the property. Into the bin-shaped file cabinet.
Well, ignoring the Call Option document worked out. They accepted the offer without it. I bought the last unit.
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