What is an “off-the-plan” purchase, and how does it differ from a standard purchase?
Buying “off-the-plan” means buying land or an apartment that does not yet exist other than as a drawing on a proposed plan.
Imagine a large paddock surrounded by a single fence. The owner would like to divide the land into small lots and sell them off.
The owner/developer must apply for and obtain a development approval and once this is received the developer can “sell” the blocks before the subdivision is registered. This is done by entering into contracts with potential buyers on the basis that the developer /vendor will sub-divide the land and register the subdivision at the Land Titles Office. Settlement is usually 14 days after registration. Usually, the vendor has a limited time (18 months) to have the land sub-divided and registered. If the land cannot be sub-divided and registered within the time, the contracts can be cancelled, and the purchasers will get their deposit back.
The vendor has disclosure plans prepared, showing the paddock divided into smaller lots. Potential purchasers select lots as depicted in the plans, and if everything goes well the purchasers will eventually receive individual titles for the blocks of land they have chosen.
The situation is the same with unit developments. Building works may not have commenced, but purchasers can enter into contracts to purchase units, chosen by reference to disclosure plans of the proposed buildings.