Deposit Risks and Buying Off the Plan

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Following the unprecedented housing boom in Sydney and Melbourne the affordability aspects of purchasing off the plan property has contributed to its popularity. Whilst purchasing off the plan sounds like a sound investment in theory, potential purchasers are quite often unaware, or do not understand the gravity of the risks involved!

Whilst there are great benefits in doing so including a quick rise in equity depending on the market, one needs to also be aware that they are essentially unsecured creditors when it comes to their deposit funds, and great care and consideration must be given before releasing a deposit at any time.

As always, the conditions of the contract should be closely analyzed. It is imperative that a buyer seeks legal advice prior to exchanging contracts and paying money towards the deposit. The main reason being that you lose important bargaining power by doing so.

A key element that is important to be aware of in such contracts which may often be overlooked is a waiver of any right to lodge a caveat in future over the property, which purchasers are technically allowed to do so.

Picture this unfortunate scenario, what if the developer were unable to secure construction finance and you had already released the deposit? Many purchasers are often left in legal limbo in this case, where although they have an equitable claim, encounter many difficulties in enforcing such a right or recouping their deposits. If you are thinking of purchasing an investment property off the plan please consult us at Priority Business Lawyers beforehand to review your contract!



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Raea Khan Circle
Director Lawyer
Raea Khan

Raea is Managing Director and Principal Lawyer for PBl Law Group. Raea assists clients with major projects, property developments, construction and strata law.

He has worked in Western Australia and Queensland assisting with expansion projects in the energy and resource sector and now predominately advises clients in Strata and Community Association matters.

He is a member of the Australian College of Strata Lawyers where majority of his work is advising developers and owners corporations with dispute related minor and major defects, strata governance and common property litigation. He is proficient at leading negotiations and meetings.

Raea has a particular interest in the commercial aspect of any dispute and always tries to weigh up the risk, reward and benefit of legal proceedings at each different stage.

Raea enjoys all forms of competitive sport, including Crossfit and actively participates in Triathlons, representing Australia as an age group athlete. He was a member of Red Head Surf Lifesaving club.

  • Strata Law
  • Construction & Major Projects
  • Commercial and Business Law
  • Planning & Environment Law