Buying off the plan means purchasing a property that has not yet been built — or is still under construction — based on architectural plans and artist impressions. In Victoria, off-the-plan purchases involve unique risks that don't apply to established property, and the legal protections differ from standard sales.
How off-the-plan purchases work
You sign a Contract of Sale before the property exists as a finished dwelling. You pay a deposit (typically 10% of the purchase price, which may be in the range of $50,000 to $150,000 or more), and then wait for the developer to complete construction and register the plan of subdivision. Settlement occurs after registration, which could be 12 to 36 months or longer.
During this period, your money is usually held in a trust account. You don't own the property, you can't move in, and you continue to pay rent or your existing mortgage elsewhere.
The cooling-off period for off-the-plan
You do have a three business day cooling-off period for off-the-plan purchases, just like any other private sale in Victoria. However, once this period expires, you are locked in. Given the long timeframe before settlement, this brief window is your only chance to change your mind without significant financial consequences.
Key risks for off-the-plan buyers
1. The finished product differs from what was promised
Artist impressions and display suites create expectations that the finished apartment may not match. Finishes may be lower quality, rooms may feel smaller than expected, and views may be different from what the marketing material suggested. Under Victorian law, the developer is obligated to deliver the property substantially in accordance with the plans, but minor variations are permitted under most contracts.
2. Property values may change
If the market drops between when you sign and when you settle, you may end up paying more than the property is worth. Your bank may value the property below the purchase price, meaning you'll need to find additional funds to complete the purchase. Conversely, if the market rises, you may benefit — but this is speculative.
3. Sunset clauses
A sunset clause sets a longstop date by which the plan of subdivision must be registered and the property completed. If the developer fails to meet this deadline, either party may have the right to rescind the contract.
Prior to 2019, developers sometimes deliberately delayed projects to trigger the sunset clause so they could resell at a higher price. Amendments to the Sale of Land Act 1962now require the vendor to obtain the buyer's written consent or a Supreme Court order before rescinding under a sunset clause. This provides important protection against developer abuse.
4. Deposit risk
Your deposit should be held in a trust account until settlement. However, some contracts include clauses allowing early release of the deposit to the developer. If the developer becomes insolvent, your deposit may be lost. Always insist that the deposit remains in trust until settlement, or that a bank guarantee protects it.
5. Defects and building quality
New apartment buildings in Victoria have increasingly been found to have significant defects, including waterproofing failures, flammable cladding, and structural issues. While the Domestic Building Contracts Act 1995 provides warranty protections (6 years for structural defects, 2 years for non-structural), enforcing these warranties against a developer can be costly and time-consuming.
Your rights as an off-the-plan buyer
- The vendor must provide a Section 32 Vendor's Statement before you sign
- You have a three business day cooling-off period (private sale)
- Your deposit must be held in a statutory trust account unless you consent otherwise
- The vendor cannot rescind under a sunset clause without your consent or a court order
- You are entitled to a pre-settlement inspection to check the finished property against the plans
Off-the-plan due diligence checklist
- Research the developer's track record and completed projects
- Review the full contract with your solicitor before signing
- Check the sunset clause date and termination provisions
- Confirm deposit protection arrangements
- Review the plans and specifications in detail, not just the brochure
- Understand what changes the developer is permitted to make
- Check the Owner's Corporation fee estimates and what they include
Get expert review before you commit
Off-the-plan contracts are typically longer and more complex than standard property contracts. They contain provisions that standard contract reviews may miss. Start with a Pre Contract Review at precontractreview.com to identify the key risk areas in your off-the-plan contract, then take those findings to a solicitor who specialises in off-the-plan purchases.