Off the plan purchases and settlements – Do you need a better deal?
Written by Luke Musto, Associate
While Australia may be moving towards easing coronavirus restrictions, the economic impacts of the virus will continue to be felt well into the future.
One of the ways some of our clients have been impacted is property buyers who have placed a deposit on an off the plan property that is currently nearing completion, in instances where developers have indicated that they will shortly be sending out settlement notices.
These buyers may now be in drastically different financial circumstances to when they first exchanged contracts on their property, which may have been a number of years earlier. This may be because of a variety of reasons, with people potentially having been made redundant, losing income, or their businesses facing a downturn or other cash-flow issues. The end result, however, would be the same – they are in a position where they are finding it difficult to have their finances in order ready for settlement.
With this in mind, our property lawyers have already been assisting in negotiating property issues that have arisen in relation to coronavirus. While no two cases are identical, we have put together some general key tips to help people who may need to renegotiate their off the plan settlement.
What are my options?
Firstly, if you are in a position where settlement is approaching and you are having finance issues, you need to consider how you ultimately would like to proceed. No two situations are identical so it is important to know what you want to get out of negotiations so you can then set a goal to work towards. Some of these options would include:
- Getting a discount on settlement price;
- Delaying settlement to allow you more time to get finances in order; or
- Walking away from a contract altogether and trying to negotiate a resolution to mitigate ongoing liabilities.
How do I proceed with negotiating?
Once you have decided what you would ultimately like to achieve with negotiations, you can start taking action. Some key things to keep in mind include:
- “Dust off” your contract and have your solicitor review so that you know where you stand in terms of what was initially agreed.
- Make a plan and have a strategy in place that works for you.
- Try and be pro-active and get in early to commence negotiations with the developer’s legal team – remember that you may not be the only buyer in the development having issues.
- Be extremely careful with all communications with the developer and their solicitor. It is critical to not make any representations to them and to keep your options open.
- This is why it is a good idea to have a solicitor speak to them on your behalf and open up a discussion. Solicitors have legal privileges meaning they can talk on a “without prejudice” basis, which means that statements made in a genuine attempt to settle a dispute can’t be later used against them as evidence in court. Think of this as speaking “off the record” but with full legal protection behind it.
- Formalise any agreed variations in writing.
- Avoid escalating disputes and always keep the negotiation door open.
Being able to renegotiate terms in an off the plan purchase is definitely not a given, however, by following these steps you will give yourself the best chance at obtaining a favourable outcome. It may be the case that for purchasers with genuine financial difficulties as a result of the coronavirus, their developers may be open to coming to an agreement rather than risking having an additional property to sell in a buyer’s market. We encourage anyone who has an off the plan settlement approaching and has faced an economic downturn in relation to coronavirus to get in touch with our experienced property law team today.
Harris Gomez Group is an Australian law firm with 25 years experience based in Sydney, with sister offices in Santiago and Bogotá. We specialise in business and corporations law, technology law, and cross-border issues. We assist small to medium-sized Australian businesses with a variety of issues, including employment law, property law issues (such as rental contracts) and contract disputes.
To better understand how we can support you, please contact Harris Gomez at email@example.com
Our Sydney office is located at Level 7, 92 Pitt Street, Sydney NSW 2000.