Are you looking to buy a section off the plans/without a title?
We can help ensure your interests are protected — contact expert property lawyer, Wade Hansen today to set up an appointment.
12 December, 2014 | Wade Hansen
Buying off the plans in this situation means that Richard and Sally are purchasing a section for which title (ownership papers) has not issued yet. They are entering into a contract with the land subdivider (developer), which will usually be in a unique form as it will contain comprehensive terms and conditions.
The main issue is that invariably you are buying something which may currently be a paddock with some sheep grazing in it. You don’t know what the end result will be like, when it will be completed and what your total costs will be to buy the land and build your home.
1. Ensure that you do your homework (due diligence) so that you will have a clear idea as to what you will ultimately own. Further, you will need to ascertain exactly what you can build on the land and how much this will cost you so that you can budget for it accordingly.
2. What stage is the developer at in creating the sections? Do they have resource consent and do you know what the terms of the consent are that will affect your land and what restrictions will be placed on your land by council? For example, will there be any drainage easements running through your section and are there specific engineering requirements you will need to comply with.
3. Will the developer be imposing land covenants on the section? This will restrict what you can and can’t do with the land, what you can and can’t build on the land and so forth.
4. How much deposit will you be required to pay and when will you require it to be paid? Obviously, this is money out of your pocket and you might not receive any interest on your deposit. Further, ensure that the deposit is held by a stakeholder until your title issues to ensure that your deposit will not be lost if something happens with the developer.
5. How long will title take to issue? Sometimes land developers encounter delays whether they be financial or something out of their control (weather). Accordingly you may wish to have the opportunity to exit from the agreement in the event that a title has not issued by a certain date (known as a sunset date).
At Smith and Partners we have the experience to be able to give you an overview of your proposed purchase and assisting you with any negotiations with the vendor. You may also be interested in a similar article from our website in relation to building contracts.
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22 February, 2012 | Wade Hansen
7 March, 2012 | Wade Hansen