Buying off the plans: what to check before you sign

Buying off the plans means committing to a home before it exists. You sign against drawings and a specification, then settle when the building is finished and titled, sometimes a year or more later. Done with your eyes open it's a sound way to secure a new home. Done blind, it's stressful.

We sit on the other side of these contracts, so we know exactly which clauses protect a buyer and which ones get skimmed. This is the list I'd give a mate before they signed anything.

One thing before the list. Get your own solicitor across the full contract first. Not a quick once-over, a proper review. A good property lawyer earns their fee several times over on an off-the-plan deal, and everything below is a prompt for that conversation, not a substitute for it.

Know what you're actually signing

An off-the-plan agreement is a sale and purchase contract for a property that doesn't physically exist yet. The contract describes what will be built: floor area, layout, fixtures, finishes, and for an apartment the body corporate structure. Both sides are bound to complete once it's built and titled.

Two things make it different from buying an existing home. There's a long gap between signing and settling, so you commit now and pay the balance later. And you're relying entirely on the specification, so the quality of that document matters more than anything else in the pack. Vague specs are where disputes start.

Ask where your deposit sits

You'll typically pay around 10% on signing, though it varies. The percentage matters less than the answer to one question: where is that money held?

In a well-run development the deposit sits in a solicitor's or agent's trust account, or is secured by a deposit bond or bank guarantee. It is not spent on construction. Ask directly, and ask what happens to it if the project doesn't proceed. If the answer is fuzzy, that tells you something.

The balance is due at settlement, once the building is complete and the title has issued. Talk to your bank early though, because lenders treat off-the-plan purchases differently from existing homes.

The sunset clause. Read it twice.

A sunset clause sets a long-stop date by which the project must hit an agreed milestone, usually titles issued or code compliance. If the date passes without it, one or both parties can cancel and the deposit comes back.

It exists to protect you from a project that stalls forever. But the drafting decides who it actually protects. Some clauses let only the buyer cancel. Some let the developer cancel too, and in a rising market a developer-held cancellation right can be used to walk away and re-sell the same home at a higher price. That's the opposite of protection.

So the questions for your solicitor are: who holds the cancellation right, and is the sunset period realistic for the build with a fair margin? If I could make a buyer read one clause properly, it's this one.

The valuation gap

Here's the risk that catches people who've done everything else right. You agree a price today. Your bank values the property near settlement, maybe eighteen months later. If the market has softened in between, the valuation can come in under your contract price, and the bank lends against the lower number. The shortfall is yours to find in cash.

That's not a reason to avoid buying off the plans. It's a reason to keep a buffer and not stretch to the last dollar of your pre-approval. A mortgage adviser who's handled off-the-plan settlements will know how to structure for it. Also worth asking: does your pre-approval even survive to a settlement date a year away? Most don't, they lapse and get reissued.

The render is not the contract

Renders sell a feeling. The specification is what you can hold the developer to. Before signing, be clear on what's included (appliances, flooring, heating, carpark, storage) versus what's an optional extra, and read the variations clause.

Most contracts let the developer substitute materials of equivalent quality, and over a two-year build that's fair, supply chains move. What you're looking for is wording that holds the substitution to genuine equivalence rather than leaving it open-ended. A developer who specifies tightly and reserves only narrow substitution rights is telling you they're confident in what they're delivering.

Dimensions are described to a tolerance too. A small variance on final floor area is normal and the contract should say how it's handled.

Buying as an investment? Check your brightline timing

The brightline clock generally starts when the title registers to you at settlement, not when you signed. On an off-the-plan purchase those dates can be years apart, so if you're modelling a future sale, count the two-year window from settlement. Plenty of people count from signing and get the maths wrong.

The short version

Before you sign: your own solicitor has reviewed the contract. You know where the deposit is held. You know who can cancel under the sunset clause and when. You've stress-tested the valuation gap with a buffer. The specification is tight and you know what's included. And you've checked the one thing no clause can give you, which is whether this developer has actually finished what they started before.

That last check is the quiet one, and it's the best protection on the list. Contracts manage risk. Track record removes it. Our own answer to that question is a building you can walk past: the Logan Apartments in Epsom, completed in December 2023 and fully sold.

This is general information, not legal or financial advice. Have your own solicitor review any contract before signing. If you'd like to hear when Heartland opens registrations on a new project, register your interest.

Sources

• Inland Revenue — The brightline test (brightline start and end dates and the two-year period)