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Posted 11 August 2021
Buying a strata apartment “off the plan”, i.e. based on drawings and specifications, before it has been built, can go wrong, but there are potentially things you can do to protect your position.
This has been illustrated by a number of recent Sydney developments, where serious defects were identified and new owners were faced with enormous rectification costs, doubts about whether developers/builders and other third parties could be held liable and with their ability to occupy, lease, refinance or sell their apartments hindered.
The position has become even more complicated with the enactment of new legislation aimed at protecting purchasers, including the Design and Building Practitioners Act 2020 and the Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020. The latter Act creates the office of NSW Building Commissioner and gives the Commissioner substantial investigative and enforcement powers. The legislation can result in a scenario in which significant defects are identified in an apartment building before it is completed and a range of orders are made, which could include an order prohibiting issue of an occupation certificate or an order that rectification work be undertaken. There is also the possibility of Council becoming involved and making various orders.
A purchaser in these circumstances may have rights under the contract for sale, but these will usually be very limited and such a purchaser would be well advised to obtain legal advice as to how these rights are impacted by the legislation and the best approach to take.
The crucial issues for purchasers to consider before going down that path are:
The key points in relation to termination or rescission of a contract by a purchaser in this scenario are:
We have considerable experience with these issues and could help you manage difficulties in this area.
***The information contained in this article is general information only and not legal advice. The currency, accuracy and completeness of this article (and its contents) should be checked by obtaining independent legal advice before you take any action or otherwise rely upon its contents in any way.