Buying off the plan in Queensland: what you need to know before you sign

Aug 14
4 min read

Buying off the plan (purchasing a property before it's been built) can be an exciting opportunity. You're securing tomorrow's property at today's price, and in a rising market that can work significantly in your favour.

But off-the-plan purchases are also more complex than standard property transactions, and there are risks that buyers don't always fully understand before they sign. This guide covers everything you need to know.

What does 'off the plan' actually mean?

An off-the-plan purchase is a contract to buy a property that doesn't yet exist in its finished form. You're buying from architectural plans, renders, and specifications, rather than inspecting a completed building.

Off-the-plan purchases typically include:

Apartments and units in new residential developments
Townhouses in staged developments
House and land packages where the home is yet to be built

The key distinction from a standard purchase is timing - there is usually a significant gap between signing your contract and settlement, which can be anywhere from several months to a few years depending on the development.

The risks of buying off the plan - and how to protect yourself

Sunset clauses

A sunset clause is a provision in an off-the-plan contract that allows either party to terminate the contract if the development isn't completed by a specified date. While this protects buyers if a developer fails to deliver, sunset clauses can also be used by unscrupulous developers to exit contracts when property values have risen, only to resell the same property at a higher price.

Queensland law has introduced reforms to limit the misuse of sunset clauses by developers, but you should always have your conveyancer review any sunset clause provisions carefully before you sign.

Variations to the final product

What's delivered at settlement may not be identical to what was shown in the renders or marketing materials. Developers typically retain the right to make variations to finishes, layouts, and specifications, within limits.

Your contract should specify what variations are and aren't permitted, and what your rights are if material changes are made. This is an area where a pre-signing contract review is particularly valuable.

Market value at settlement

If the property market falls between the time you sign and the time you settle, the property may be worth less than you paid for it. Your lender will value the property at settlement - if that valuation comes in below the contract price, you may need to fund the gap from your own resources.

Developer insolvency

If a developer becomes insolvent before completing the project, your deposit may be at risk. In Queensland, developer deposits must be held in a trust account - which provides some protection. Understanding how your deposit is held is an important question to ask before signing.

What to check in an off-the-plan contract

Off-the-plan contracts are typically longer and more complex than standard contracts. Key things your conveyancer will review include:

The sunset clause: When is it triggered, and what are the notification requirements?
Permitted variations: What can the developer change, and what recourse do you have if they do?
Deposit terms: How much is required, when is it payable, and how is it held?
Sunset date: Is the projected completion date realistic given the stage of development?
Body corporate: For units and apartments, what are the estimated body corporate levies? These are often disclosed in the contract and can be significant.
Defect liability period: What is the developer responsible for rectifying after handover, and for how long?
Special conditions: Are there any unusual conditions that could affect your ability to settle or use the property?

Settlement for off-the-plan purchases

Settlement for an off-the-plan purchase is triggered by the developer issuing a notice of completion - typically when the building is registered (for apartments) or the build is completed and the title is issued (for house and land packages).

You will usually receive a notice period (often 14 days) between completion notice and settlement. This is not a lot of time, so it's important that your finance remains in order throughout the construction period - not just when you first signed the contract.

Things to do in the lead-up to settlement:

Re-confirm your finance: Your pre-approval from the time of signing may have lapsed. Contact your broker well before the expected completion date to ensure your finance is current.
Pre-settlement inspection: You're entitled to inspect the property before settlement. Do it - and document anything that isn't consistent with the contract specifications.
Building insurance: Arrange building insurance from settlement day (the risk passes to you at settlement for off-the-plan purchases, unlike standard contracts).
Body corporate documents: For units and apartments, review the body corporate rules, budget, and any outstanding levies before settlement.

Off-the-plan and the First Home Owner Grant

Off-the-plan purchases are eligible for the Queensland First Home Owner Grant, provided the property meets the definition of a new home and all other eligibility criteria are satisfied. Given that the FHOG is currently $30,000, this can make an off-the-plan purchase particularly attractive for eligible first home buyers.

Transfer duty concessions may also apply - your conveyancer will confirm your eligibility based on your specific circumstances.

How Impact Legal helps off-the-plan buyers

Off-the-plan contracts require careful review before you sign, and ongoing attention throughout the often lengthy period between signing and settlement. At Impact Legal, we work with both local and interstate off-the-plan buyers across Queensland, reviewing contracts before signing, managing the process through to settlement, and keeping you informed at every stage.

Fixed fee. No surprises. Based in Cairns, serving all of Queensland.

Get in touch at impactlegal.com.au or call us on 07 4015 3464.