Buying off the plan in NSW: your rights before and after you sign

Key facts

What does buying off the plan mean in NSW?

Buying off the plan means signing a contract for a property that does not yet have its own title. The NSW Registrar General describes an off-the-plan contract as one used to sell a parcel of land or a strata unit that does not have its own title when contracts are signed.

The Conveyancing Act 1919 (NSW) has special rules for residential off-the-plan contracts. The disclosure statement, the 10 business day cooling-off period and the deposit rules apply to contracts made from 1 December 2019, and the Act also limits when a developer can rely on a sunset clause.

In the Hills District and nearby growth areas, off-the-plan contracts often come up with land lots in estates such as Box Hill, North Kellyville, Rouse Hill and Schofields, and with new apartments around Norwest. In a house-and-land package, the land contract may be an off-the-plan contract, but the separate building contract is a home building contract with its own rules.

Sources: Off-the-plan; New off-the-plan laws now in force

What must the developer give you before you sign?

Before you sign, the developer (the vendor) must attach a disclosure statement in the Registrar General's approved form to the contract, as section 66ZM of the Conveyancing Act 1919 (NSW) requires.

If the disclosure statement is not attached, you may rescind the contract by written notice within 14 days after the contract is made, unless the contract has been completed.

Before you sign, check that you have:

• a draft plan of the lot, prepared by a registered surveyor, as part of the disclosure statement
• the sunset date or dates and other key details, set out in the disclosure statement
• the proposed by-laws, if the lot will be in a strata or community scheme
• the schedule of finishes, if building work is part of the contract, which lists the fixtures and finishes you are paying for
• the usual prescribed documents for any NSW contract, such as a section 10.7 planning certificate from the local council

Sources: Off-the-plan; Buying property off the plan; Conveyancing (Sale of Land) Regulation 2022; The sale process

How long is the cooling-off period for off-the-plan contracts?

A residential off-the-plan contract in NSW has a 10 business day cooling-off period, ending at 5pm on the tenth business day after the contract is made. That is longer than the 5 business days that applies when you buy an existing home other than at auction.

If you rescind during the cooling-off period, you forfeit 0.25% of the purchase price, which is $250 for every $100,000.

The cooling-off period does not apply if you buy at auction, and it can be shortened or waived only if your solicitor or conveyancer gives the developer a section 66W certificate, so get advice before agreeing to that.

Use this time to have the contract, disclosure statement, draft plan and schedule of finishes reviewed, and to check your finance and stamp duty position.

Sources: New off-the-plan laws now in force; Buying property off the plan

Where is my off-the-plan deposit held?

Your deposit, and any instalments, must be held by the stakeholder in a trust or controlled money account for the whole contract period. For contracts made from 1 December 2019, the money cannot be released to the developer before completion, which helps protect you if the developer becomes insolvent.

A 10% deposit is usual in NSW, but a different amount can be agreed. A deposit bond or bank guarantee can be used instead of cash only if the developer agrees before you sign.

Sources: New requirements for off-the-plan contracts from 1 December 2019; Making an offer on a property; Buying property off the plan

What if the developer changes the plan or finishes?

The developer must tell you about any change that makes the disclosure statement inaccurate in a 'material particular'. This includes changes to the draft plan, by-laws, schedule of finishes, easements or covenants, or a management statement, that adversely affect your use or enjoyment of the property.

You can rescind only if you would not have entered into the contract had you known of the change, and you would be materially prejudiced by it (sections 66ZO and 66ZP of the Conveyancing Act 1919). If you have that right, you can instead claim compensation of up to 2% of the price. You must act within 14 days after receiving the notice of changes, or within 14 days after receiving the registered plan if it reveals an inaccuracy, and a compensation claim must be made before completion. If the claim is not settled by agreement within 1 month (or by completion, if that is earlier), it goes to arbitration.

The developer must give you a copy of the registered plan and associated documents at least 21 days before settlement, and you cannot be required to settle within that 21-day period. Compare the registered plan with the draft plan as soon as it arrives.

Sources: New requirements for off-the-plan contracts from 1 December 2019; Buying property off the plan; Conveyancing Act 1919 (NSW), section 66ZO: Purchaser's right to rescind after service of notice of changes; Conveyancing Act 1919 (NSW), section 66ZP: Purchaser's right to rescind after service of registered plan; Conveyancing (Sale of Land) Regulation 2022

Can the developer cancel the contract under a sunset clause?

Only with your written consent or a Supreme Court order. Under section 66ZS of the Conveyancing Act 1919 (NSW), a sunset clause in a residential off-the-plan contract cannot operate automatically.

A sunset clause lets the contract be rescinded if a 'sunset event', such as the creation of the lot or the issue of the occupation certificate, has not happened by the sunset date. Before a developer can rely on it, these steps apply:

• These rules apply to residential lots that have not yet been created, whether strata or not (section 66ZL). That generally includes a vacant land lot in a new residential estate, because vacant land on which a single home may lawfully be built is residential property under section 66Q, subject to size limits. Have your solicitor or conveyancer confirm your contract is covered before you rely on them.
• Get advice before you sign any consent to rescind.

1. Written notice – The developer must give you at least 28 days' written notice explaining why it proposes to rescind and why the sunset event has not happened.
2. Your consent or a court order – The developer then needs your written consent or a Supreme Court order. The Court makes the order only if it is just and equitable.
3. Court costs – The developer generally pays your costs of the court proceedings, unless you unreasonably withheld your consent.

Sources: Off-the-plan; Conveyancing Act 1919 (NSW)

When do you pay stamp duty on an off-the-plan purchase?

Transfer duty (stamp duty) is normally due by the earlier of settlement or 3 months after the contract date, but eligible owner-occupiers buying a home off the plan can defer it. Duty is then payable at the earliest of 15 months after the contract date, completion, or assignment of the contract.

The conditions for the deferral are:

• the contract must be for a home that is to be built or completed before settlement (for example, an apartment or a house sold with the land). The deferral is not available for vacant land only, including the land contract in a house-and-land package with a separate building contract
• the property must be your principal place of residence, so investors cannot defer
• no purchaser can be a foreign person
• for contracts from 1 July 2023, at least one purchaser must move in within 12 months of completion and live there for at least 12 continuous months
• the deferral is not automatic: your solicitor or conveyancer arranges it

Sources: Transfer duty for off the plan property purchases; Who pays transfer duty and when

Do I pay GST at settlement on a new home?

You may have to pay part of the price directly to the Australian Taxation Office at settlement. When new residential premises or potential residential land is sold, the developer must give you written notice of whether GST withholding applies.

If it applies, you pay 1/11th of the contract price, or 7% of the price if the margin scheme is used, to the ATO at settlement. The notice must include the supplier's name and ABN, the amount, when it must be paid and the GST-inclusive price.

Sources: GST at settlement: a guide for purchasers and their representatives

What protections apply to building defects?

New homes in NSW come with statutory warranties under the Home Building Act 1989: 6 years for major defects and 2 years for other defects, from completion. For a strata building, completion is the date of the occupation certificate for the whole building, and if a breach is discovered in the last 6 months of a warranty period there is an extra 6 months to start proceedings.

For new apartment buildings, Building Commission NSW has extra powers before the occupation certificate is issued. Developers of some new strata buildings must also lodge a building bond under the Strata Building Bond and Inspections Scheme, or instead take out approved ten-year (decennial) liability insurance for the building. Not every building is covered, so check which, if either, applies to yours.

Sources: How Building Commission NSW deals with building defect complaints; Lodging an expected completion notice for regulated buildings; Strata Building Bond and Inspections Scheme; Ten-year defect insurance for apartment buildings

How a conveyancing solicitor can help

A conveyancing solicitor can review the off-the-plan contract, disclosure statement and draft plan before you sign, explain your cooling-off, compensation and sunset clause rights, and coordinate settlement once the plan is registered. To have an off-the-plan contract reviewed, send it to us or call (02) 9000 1408.

Frequently asked questions

Sources

1. Off-the-plan – NSW Registrar General
2. New off-the-plan laws now in force – NSW Registrar General
3. New requirements for off-the-plan contracts from 1 December 2019 – NSW Registrar General
4. Buying property off the plan – NSW Government
5. Making an offer on a property – NSW Government (NSW Fair Trading)
6. Conveyancing (Sale of Land) Regulation 2022 – NSW Legislation
7. The sale process – NSW Fair Trading
8. Conveyancing Act 1919 (NSW) – NSW Legislation
9. Conveyancing Act 1919 (NSW), section 66ZO: Purchaser's right to rescind after service of notice of changes – AustLII (NSW Consolidated Acts)
10. Conveyancing Act 1919 (NSW), section 66ZP: Purchaser's right to rescind after service of registered plan – AustLII (NSW Consolidated Acts)
11. Transfer duty for off the plan property purchases – Revenue NSW
12. Who pays transfer duty and when – Revenue NSW
13. GST at settlement: a guide for purchasers and their representatives – Australian Taxation Office
14. How Building Commission NSW deals with building defect complaints – NSW Government (Building Commission NSW)
15. Lodging an expected completion notice for regulated buildings – NSW Government (Building Commission NSW)
16. Strata Building Bond and Inspections Scheme – NSW Government
17. Ten-year defect insurance for apartment buildings – NSW Government (Building Commission NSW)

Related pages

Related services

• Off-the-Plan Conveyancing
• Contract Review and Legal Advice
• Residential Property Conveyancing

Related guides

• The cooling-off period in NSW: how it works for property buyers
• NSW stamp duty (transfer duty): 2026-27 rates, examples and when it is due
• Strata reports in NSW: what to check before buying a unit or townhouse
• How long does settlement take in NSW and what happens on settlement day?
• First home buyers in NSW: duty exemption, grants and eligibility

Local pages

• Conveyancing in Box Hill
• Conveyancing in North Kellyville
• Conveyancing in Schofields
• Conveyancing in Rouse Hill