Buying New Build Property Off-Plan by Tringa Hashani
May 7, 2019 | Silver Shemmings
Buying New Build Property Off-Plan
Buying off-plan means purchasing property that has not yet been built. The buyer is buying the property off a developer’s plan and specification of the property rather than after visiting and inspecting the property
Steps in the purchase of an off-plan property
1- Having decided to purchase your property, the developer will often expect you to make a reservation payment to take the property off the market. You will then benefit from this exclusivity period that usually lasts 28 days. Within this 28 day period, the developer will normally expect the “exchange of contracts”. It is important that you check how much of the reservation payment is refundable, if at all
2- Appoint a property lawyer or solicitor who will act for you during the two main stages in a purchase transaction (a) exchange of contracts and (b) completion of the purchase thereafter
3- The property lawyer will carry out due diligence on the property documents and prepare a ‘Report on Title‘ that will summarise the information detailing the mechanics of the transaction and the relevant contents of all documents relating to your purchase. The Report will provide an explanation of the terms of the contract, the lease, management information, build warranty guarantee scheme and the various searches (i.e. environmental, local authority, planning, drainage and water)
4- When you receive the ‘Report on Title’, it is important to read it thoroughly and raise any questions you may have, we are here to happily assist with any questions you are unsure about
5- The developer will be signing a contract identical to yours and when both parties are ready to enter into a binding commitment, we will “exchange contracts” with the developer’s lawyers; this will normally require a 10% deposit payment of the purchase price from you to be held by us on that date. We will then send your deposit to the developer’s lawyers together with your part of the contract. From the moment of exchange, you will be under a legal obligation to buy and the seller will be legally committed to sell. We will ensure that proper safeguards are in place to protect your deposit in the event that the developer goes bust or fails to complete.
6- It is very common for contracts to include second deposits which must be paid over during the construction of the property. These are usually expected either after a fixed date (often 12 months from exchange of contracts) or when the developer has reached a construction landmark (e.g. the foundations have been laid). The second deposit is usually a further 10% of the purchase price
7- When buying off-plan, the agreed Completion Date (the date upon which you take ownership) is subject to a notice from the developer’s lawyers confirming that the property is finished in accordance with the terms of the contract and that it is ready for occupation. On receiving the Completion Notice, you are expected to complete your purchase in 10 working days of receipt of the Notice. If you are using a mortgage to assist in your purchase, it is imperative to have your finances ready to drawdown upon receipt of the Notice
If you would like to discuss New Build conveyancing or purchasing off-plan in further detail, call us on 020 3906 2530 to speak to a member of the team
** This note is brief and general in nature and does not constitute legal advice on the part of Silver Shemmings LLP and is it intended to only serve as a guide and should not be relied upon as a substitute for professional advice
Author Tringa Hashani has several years of experience in property law, acting for Housing Associations, Banks and Developers including acting for Housing Associations in large scale charging exercises, acquisitions & sales of large, mixed-use development sites, sales / purchases of residential & commercial properties, drafting head leases & sub leases for residential & commercial properties, rectification of unfavourable terms in leases, preliminary title investigation for portfolio advice, acting for various lenders in mortgaging & re-mortgaging transactions, reviewing tenancy agreements, rent deposit deeds & nomination agreements, reviewing & drafting S.106, S278, S104 Agreements & other planning / development Agreements, advising on title issues & rectification of errors found in title registers, dealing with the registration of unregistered land, including adverse possession registrations, creation of easements & extinguishment / release of easements
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