08 January 2004
Checklist for off the plan strata title sales
Lawyers are often guilty of providing large amounts of complex technical legal advice to clients about all the things that can go wrong with off the plan strata title sales. In an industry where speed is crucial, such advice ignores the client's real needs.
Recognising that our most important role as lawyers is the provision of prompt, practical advice and commercially acceptable documents so that contracts can be prepared, issued and exchanged as quickly as possible, we have prepared the following checklist.
It is designed so that clients can check that all major issues have been covered and also identify the information that we need to prepare the contract.
- What are the current title details for the land?
- Are there any zoning issues or restrictions on user that will impact on the development?
- What is the name of the local council?
- What are the names and contact details of the surveyor, architect and selling agent(s)?
- What is the date by which the strata plan must be registered by Land and Property Information?
- We recommend that the date is calculated by taking the estimated date of completion of the project and adding at least 6 months
Adjustment of Rates and Taxes
- Will these be done on an area/unit entitlement basis or as fixed amounts?
- We recommend fixed amounts, as these provide certainty to purchasers.
- Fixed amounts should be calculated based on current rates and taxes and taking into account increases in those rates and taxes during construction of the project.
- What is the mechanism for determining the Completion Date?
- We recommend the later of 42 days from exchange and 21 days from notification of registration of the strata plan given need for occupation certificate (see point 18).
Interest Rate for Late Completion
- What is the interest rate?
- We recommend a fixed amount of 8-10% as it is more marketable.
Draft Strata Plan
- When will this be available?
- A draft needs to be included in any contracts that are issued.
Variations to Draft Strata Plan
- What is the amount by which the total area of a lot must decrease to allow a purchaser to rescind the contract?
- We recommend 5%.
- Will these be incorporated into the lots or part of the common property and covered by exclusive use by-laws?
- We recommend that car spaces are incorporated into the lots as this will increase the marketability of the project.
- Consider the creation of utility carspace lots
- What form of by-laws will be used?
- Will there be any unusual/special by-laws?
- A draft of the by-laws needs to be prepared and inserted in any contracts that are issued.
- A strata manager should be appointed as early as possible.
- The strata manager's input should be sought in relation to the by-laws.
Section 88B Instrument
- Will any easements/restrictions on user/positive covenants be required?
- The Development Consent may require their creation.
- A Section 88B Instrument will need to be prepared and inserted in the contract.
Schedule of Finishes
- A detailed schedule of finishes must be inserted in each contract.
- What is the length of any defects liability period?
- This should match with the defects liability period in the building contract.
- How will this be covered in relation to the sale price of each lot?
- Detailed tax advice should be obtained before any decision is made.
- Will depreciation schedules be provided to all purchasers as a matter of course or only at request and the expense of the purchaser?
- A purchaser must receive an occupation certificate from the local council or an accredited certifier at least 14 days prior to settlement.
- Is the land contaminated/likely to be contaminated?
- Are any environmental audit reports available?
We suggest you use this checklist as a starting point for each development. Answers to the questions can form the initial instructions to us. The checklist can also form the agenda for an initial meeting. It will clarify any outstanding issues and provide us with the information we require and get the contract exchanged quickly and efficiently.