Off the Plan Purchase : Benefits, Risks & Legal Protections

14 April 2025 in Property Dispute Lawyers | 5 min read | skip to FAQs

This article examines the benefits and risks of off the plan purchase and the current legal framework. We also review obsolete restrictive covenants, how they can be removed and the recent amendments proposed by the Office of the Registrar General in relation to off the plan purchases and obsolete restrictive covenants.

What is an Off the Plan Purchase?

Off the plan purchases are agreements for the sale/purchase of real property that is yet to be developed or constructed. This means that a purchaser will enter into a contract to purchase a property that does not yet exist. The settlement date of these contracts does not occur until after registration of the plan of subdivision (or a strata plan) with the NSW land registry.

Benefits of Off the Plan Purchases

Property price

With an off the plan purchase, buyers can secure a property at current prices with a settlement date months or years later. This is a big advantage in a property market with rising prices.

Finances

Buyers can secure the property by only paying a 5% or 10% deposit and then utilise the additional months or years to settlement to save and explore the best mortgage options.

Custom fittings

Buyers have the opportunity to request custom fittings to the property’s interior and have a say in the overall finished product of their property.

Security for developers

With respect to the developers of the property, off the plan purchases are beneficial to them as it gives them some financial security and confidence that the project will seel and be viable. Off the plan sales also enable developers to secure lending to fund the construction of the project.

Risks of Off the Plan Purchases

No pre-contract inspections

The buyer is taking a risk with off the plan purchases as the buyer is unable to physically inspect the property prior to signing the contract and the final product may differ from the buyer’s expectations.

Uncertain settlement date

The settlement date is uncertain because the development and construction of the property may be subject to lengthy delays.

Withdrawal

Some contracts may not allow for the buyer to withdraw or terminate and may not impose limitations on the developer’s ability to extend the sunset date. The sunset date is the latest date that the developer may complete the project.

Damages

In circumstances where the contract is rescinded or terminated without the purchaser’s consent, any entitlement to the purchaser for loss of bargain damages or any share of capital gain through rising land values will be subject to the terms of the contract. Most contracts provide the developer with the right to rescind or terminate the contract in certain circumstances, such as delays, without any right for the purchaser to recover damages.

Purchaser’s caveat

Generally off the plan contracts will prohibit the lodgement of a purchaser’s caveat.

The Current Framework and Buyer Protection

The Conveyancing Act 1919 (NSW) and Conveyancing (Sale of Land) Regulation 2022 (NSW), govern all sales of real property in New South Wales and provide specific provisions in relation to off the plan purchases.

The current buyer protections include:

1. 10 days cooling off;
2. Required developer Disclosure Statement;
3. Required final registered plan;
4. The documents need to be provided to the purchaser at least 21 days before settlement; and
5. The developer must inform the purchaser on certain changes.

What reforms to Off the Plan Purchase have been Proposed?

The Office of the Registrar General published a discussion paper that includes proposed amendments to the legislation in relation to off the plan purchases and obsolete restrictive covenants. The paper was available for public comment until 7 March 2025.

Expanded disclosure obligations

Proposals have been made to expand disclosure obligations such as, the status of the project including any delays and the expected completion date, whether development approval has been obtained, whether the developer owns the site.

Sunset clauses

Mandatory sunset clauses, where there is a clause specifying a date by which the plan registration occurs, and occupation certificate is issued have also been proposed. Additionally, restrictions on the extension of sunset clauses has also been proposed.

What are Sunset Clauses in off the plan purchases?

Sunset clauses are commonly used in off the plan contracts and they set a deadline by which the ‘sunset event’ (completion) must occur. Some off the plan purchase contracts allow the developer to extend the sunset date and may not allow the purchaser to rescind or terminate the contract in the event of an extension to the sunset date.

NSW legislation defines sunset events as the registration of the plan or the issuance of an occupation certificate. There is no prescribed form for the sunset date clause and the terms will depend on each contract.

What are the Issues associated with Sunset Clauses?

Many sunset date clauses do not provide the purchaser with a right to terminate a contract despite protracted delays. Additionally, the contract may allow the developer to unilaterally extend the subset date multiple times, drawing the contract out indefinitely. In a market where property prices are rising it is in the developer’s interest to extend the sunset date and perhaps even terminate the contract allowing the developer to resell the property at a higher price.

Conversely, in the event of unavoidable delays, particularly where such delays could not be foreseen the developer may require the flexibility to extend the sunset date. In such circumstances a comprehensive regime is required to appropriately allocate the risk of delay between the developer and purchaser.

How can BSM Sydney Lawyers assist you?

The property dispute lawyers at BSM Lawyer Sydney have experience with the benefits and risks of off the plan purchase. We remain up to date with the most recent legislation and are able to provide you with accurate, easy to understand legal advice that is tailored to your personal situation. The property dispute lawyers at Brander Smith McKnight Sydney Lawyers are renowned expert negotiators and are able to advocate for you and negotiate with developers, purchasers, builders and other landowners in relation to off the plan purchases. Our senior property dispute lawyers offer a free 20-minute consultation. Our principal lawyer at Brander Smith McKnight Lawyers, Mark Smith, has been interviewed by and quoted in a Law Society Journal article on off the plan purchases.

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BSM Lawyer Sydney have offices conveniently located in Sydney CBD, Sutherland, Parramatta, Shellharbour and Wollongong.