Buying off-the-plan is a great way to enter or introduce yourself into the property market. However, can you sell off the plan before settlement?
As buyer’s advocates we source many properties for buyers and help them settle in the best means possible. However, during the construction phase, some buyer’s personal circumstances change. These are often unavoidable and can cause their finances to deteriorate and fall into a position of being unable to settle. Unforeseen events can include relationship/marriage breakdown, poor health and a loss of job to name a few. Essentially buying off the plan places you into an unconditional sale, however buying property in Melbourne and greater Victoria allows you to sell off the plan before settlement.
Can you sell off the plan before settlement?
Yes you can…
The term ‘and/or nominee’ is also known as a ‘nominee sale’. This clause in the contract of sale, provides the option for someone who has purchased a property to find another buyer to step in and have the contract transferred to their name and finalise the settlement. This transfer of ownership releases all rights to the property, legal ties and the title of the property to the new nominee.
The title to an off the plan property doesn’t actually pass to the new buyer until settlement is reached. Technically, once you’ve signed an unconditional contract the property can be re-sold. However, you’ll need to review the contract of sale prior to signing. Some developers have a condition to restrict the re-sale of a propriety prior to settlement. Some also charge fees to complete the nomination sale. It’s ideal to speak to your conveyancer or solicitor in advance.
If a nomination sale is approved by the developer and a buyer is found, please note you’ll be required to pay your solicitor a fee to draft the documents and/or facilitate the property deposit with the new buyer. You should ascertain these fees before proceeding.
How to sell an off the plan before settlement
Technically, under an off-the-plan contract, you don’t receive the title until settlement. However, once you’ve signed an unconditional contract, the property can be re-sold.
Some developers won’t allow a “re-sale” prior to settlement, so it’s important to scrutinise the contract before signing if you are considering selling before you move in. It’s wise to get some legal advice as the re-sale conditions are generally buried in the fine print.
Other things to consider
Buying of the plan has many benefits, refer to our article ‘Why buy off-the-plan”
There are many points to consider before you sell off the plan before settlement. Seeking advice from your accountant, mortgage broker and solicitor will ensure you are well informed before entertaining the transaction. In all cases with our buyers, we introduce them to independent professionals who can provide detailed advice.
Some items that you need to consider before you sell off the plan before settlement:
- Tax – If you sell the property above the contract price, you will have to pay capital gains tax. Your accountant can assist you.
- Sales fees – You can source another buyer autonomously, but in most cases you may need the assistance of a real estate agent. You may need to pay advertisement/marketing costs while the real estate agent will charge a sales fee.
- Stamp duty – Even though it may feel like you don’t actually own the property, in legal terms you do… This means stamp duty applies. Your solicitor can assist you in understanding this further.
- You remain bound – Though you may have found a new buyer to take over your transaction, you , you are still responsible for the contract between yourself and the developer. If your buyer doesn’t complete their contract with you, you are still bound to settle with the developer.
If you are in a situation where you need to sell off the plan before settlement, please contact us immediately. We have a proven process to help. We have many professionals and active buyers within our network to help relieve you from the contract and get your property deposit back.
While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you want to learn more, please contact us. We welcome the opportunity to assist you.
Mar 2020
