For the first time in a very long while pre-sale contracts for residential properties are hitting the market. Residential developers and their banks have been keeping a low profile these last few years but things are beginning to change. Changes in the law mean there are some new things to look out for in agreements for sales off-the-plans.
Selling a unit off the plans?
• Carefully check timeframes – 5 working days after titles issue won’t be long enough to comply with disclosure requirements before settling. The risk? – cancelled agreements.
• Get full details of overseas buyers and their New Zealand agents – so you have the means to serve disclosure documents.
• Use the contract to best protect against cancellation for failure to provide disclosure – e.g. by agreeing what amounts to additional disclosure.
• Anticipate the expiry of the control period and the impact of that.
• Meet statutory requirements before binding the body corporate to service agreements – or the service agreement won’t stick.
• Build in a default means of service – so you’re not caught out, unable to disclose.
• Think long term when designing body corporate rules – so future plans are not hampered.
Buying a unit off-the-plans?
• Carefully review the abundance of material you will receive. You can ask for more if you don’t get everything you need.
• Expect disclosure documents and understand their limitations. Once you have signed you can’t pull out if you don’t like what’s in it.
• Assess the quality of the developers, the development.
• Understand how stages work and the extent of your control over what is proposed. It is probably very limited.
• Receive and understand a budget.
• Expect a services agreement.
By Debra Dorrington