Off-plan property contracts are complex documents
Buying off-plan property is very different to buying existing property. There will be staged payments, and complex provisions, terms, and clauses in an off-plan property contract. You’ll need a solicitor to go through the fine print. Do-it-yourself conveyancing isn’t an option.
In this post, I look at some of the legal issues that arise through the process of investing in off-plan property. I’ll also list what the solicitor does in those crucial first four weeks before you exchange contracts and commit to the investment.
What does an off-plan property contract do?
You can expect the off-plan property contract to disclose all the charges that are associated with the sale. If any potential charges that haven’t been stipulated explicitly, they should still be detailed.
The contract will also specify the fixtures and fittings that you have agreed with the developer. It is especially important if you have requested anything that is not standard.
The terms of the contract should also specify when the build will begin. There should be details of actions that can be taken if the build is delayed. There may also be penalties stipulated if the completion is delayed and dependent upon the reasons for the delay.
Also included should be a copy of the plan of the development, and the property itself. The ‘title’ that is to be transferred should be stated.
As you can see, the contract could be a long and very detailed document − very different from an existing property contract.
What does a solicitor do in the off-plan property process?
When you buy an off-plan property, the developer will usually only give you four weeks to complete and exchange contracts. If you don’t stick to this, you could lose your reservation and deposit.
On a week-by-week timetable, here’s what you can expect your solicitor to do in those crucial first four weeks, and what you need to do to help the process run smoothly:
Week 1:
You may have spoken to your solicitor, but before you have officially engaged them, they will send you a Client Care Letter. It confirms their terms of business and charges. If you’re happy with this, sign the letter and return. This gives the solicitor permission to act on your behalf.
The solicitor will request all the necessary paperwork from the developer’s solicitor. This includes all the legal documents and the contract of sale.
Week 2:
The solicitor reviews the documents and contract. If all is in order, they will ask you for the search fee. Once this is paid, they will arrange for the search to be done.
If there are queries that arise from the review of the legal documents, the solicitor will liaise between you and the developer via its solicitor. Only when any issues have been resolved will the solicitor continue.
Week 3:
During the third week, the solicitor will ensure that any and all queries have been resolved and that the search is satisfactory.
With all this in place, you’ll receive a copy of the contract to review. You’ll need to sign this.
You’ll also receive a request for the deposit.
Week 4:
This is when you’ll need to send the signed contract back to the solicitor. You’ll need to arrange for the deposit money to be paid into the solicitor’s escrow account.
Once they have received your signed contract and deposit, the solicitor will arrange for the exchange of contracts and payment of the deposit to the developer.
Your ideal off-plan property solicitor
Employ a solicitor who is used to the speed of this process. They need to understand the complexities of buying property off-plan. The deadlines are tight. Your part of the bargain is to provide what the solicitor needs when they need it.
The developer will give you time to snag the property between giving written notice that the property has been completed and when final deposit payment is due. Of course, the process doesn’t stop here. Through the next few months, your solicitor will be in touch with you at regular intervals. You’ll need them to handle:
- Transfer deeds
- Mortgage deeds
- Certificate of title
- Searches on land registry and land charges
- Stamp Duty Land Tax.
If you don’t have a solicitor who has specific off-plan experience, contact Gladfish today on +44 207 923 6100. Our Progressions Team works with a number of solicitors with expertise in dealing with off-plan property investment.
Live with passion
Brett Alegre-Wood
