Apartments - buying off the plans [Sept 2008]

APARTMENT SMART QUESTIONS & ANSWERS

Q         “I have been looking at buying a city apartment off the plans as an investment but now I am reading all those stories about properties being vastly overpriced with dodgy valuations that may not stack up once the building is built.   What legal comeback do I have once I have paid my 10% deposit?   What should I be doing in terms of getting the contract checked, safeguarding my deposit, valuation checks, building plans checks and confirmation of construction before I have to settle my purchase?”

A          In the current financial environment buying a city apartment off the plans may still be a very good investment provided that you carefully scrutinise everything before you commit to the purchase.   Often the contract is prepared by the developer's solicitor so you need to do the following:

·          Always get the contract checked over before you sign it.

·         Pay your deposit but only on the basis that it is held by the agent as a stakeholder until the settlement date and not released before that date.

·         Make the contract conditional and some of those conditions are set out below.

·         Get your own valuation by your own trusted valuer or someone  recommended by your lawyer.

·         Insist that settlement does not occur until you have the title issued, a Code Compliance Certificate and a Practical Completion Certificate from the vendor's architect or engineer - not the vendor or the vendor's project manager.

·         Make the contract conditional upon being satisfied that the Body Corporate is set up properly, the Body Corporate levies for the first year are fair and reasonable and that the Rules of the Body Corporate do not include any hidden provisions or costs that you cannot control.  Your lawyers will know how to word such clauses.

Above all, if you are in doubt or concerned look somewhere else - there are plenty of other opportunities out there at the moment.

For more information contact Tim Jones at .(JavaScript must be enabled to view this email address)

The contents of this newsletter are of a general nature only. While the information is believed to be correct no responsibility is accepted for its accuracy. Readers are advised to establish the applicability of information in relation to specific circumstances and not to rely solely on the text of this newsletter.

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