Due diligence you can do when buying a unit off the plan

When you purchase a unit off the plan, you are contracting to purchase something that doesn’t exist yet and you might have questions about the quality of the work you can reasonably expect from the builder, the reliability of the builder and what happens if after settlement you discover there are issues with the building works.

Normally, you are entitled to a 3 month ‘defect liability period’ which starts from the date your purchase settles. During this period, you can serve notice on the developer of any building defects apparent in the unit, and the developer will be required to fix those issues within a reasonable time.

Unfortunately, defective building works and the use of faulty materials may not become apparent for months or even years after your purchase has settled, leaving you with no contractual rights to force the developer or the builder to fix the issues, as your ‘defects liability period’ will have lapsed.

Often this will mean that you will have to pay for rectification works yourself and/or pay for the costs of litigation against the builder.

Usually, a better approach is to undertake your due diligence to reduce the likelihood of experiencing these issues after settlement. Some things you can do include the following:

1. Do some research on the builder or developer prior to purchasing and ask yourself: What is their work like? Have they been involved in any past or recent litigation? Are they a newly established company or do they have a lot of experience? Have they completed any other developments in the area you can inspect? Your solicitor or a strata inspector should be able to assist you with these enquiries.
2. Have a solicitor review the contract terms so that you receive advice on the risks involved in this type of transaction and are protected from those risks as much as possible.
3. Have a reputable and qualified builder inspect the property before you take possession of the unit and request that they provide you with a defects report. This report can then be served on the developer within the ‘defects liability period’, requiring the developer to repair any defects outlined in the report.

We hope this is of assistance to you and if you have any questions, please do not hesitate to contact our Property Team.