When making a large investment, like purchasing a new property, it is important for home buyers to conduct their due diligence.
Technically due diligence can only be conducted on existing properties, but when purchasing a property off the plan, it is still vital to make sure the relevant statutory protections are in place to safeguard all those involved.
Even when working on behalf of your client, conducting due diligence protects them just as much as it protects you from any expected or unexpected problems arise.
Here are two reasons why you need to conduct due diligence to protect yourself and your client when they are purchasing an off the plan property.
Thinking about what might go wrong with an off-the plan development will help you mitigate any risks if or when they arise. It is important to undertake due diligence on the developer and also the builder of an off-the-plan development.
What you are searching for here largely is instances of bankruptcy. Bankruptcy can see construction on a property halted indefinitely and your client may not get the money back that they have invested.
When conducting due diligence, consider the strength of the contract. Ask yourself:
How well prepared are the contracts?
What is the term of the contracts?
How easily can my client or another party terminate a contract?
When do the contracts expire?
Do the contracts have any termination trigger events which will be triggered by the transaction itself?
By asking yourself these questions you are looking after your client. Preparation sets you and your firm up for not only good client relationships, but also a solid reputation, which is key to expanding your business and positioning your firm well within a competitive market.
Technology can help you conduct your due diligence and manage the unique challenges and off-the-plan development can pose.
In March 2017, InfoTrack launched PlanIT, an electronic solution that simplifies the complexities of handling multi-lot and off-the-plan developments.
The PlanIT platform allows our clients to create a master contract, which will then generate individual contracts for each lot within a subdivision. These individual contracts are easily edited from a master or lot level.
When it is time for signing, contracts can be executed electronically as an e-contract from anywhere or simply printed in hard copy.
Buying off the plan has become increasingly popular, and property lawyers, developers, conveyancers and real estate agents need to be up to speed with client demand. Off-the-plan developments are becoming more popular across Australia.
Since its launch 2.5 years ago, more than 80 law firms have adopted PlanIT and over 500 projects have been created containing over 25,000 lots.
This strong demand has seen 250 real estate agents’ access PlanIT via the agent portal, with over 10,000 contracts exchanged electronically. 150 developers now have access to view project details and run daily reports.
Taking the time to conduct due diligence for your client sets you and your firm up for success. Smart technology like PlanIT can support you to check all tasks are complete and that your client can make their off the plan property purchase with confidence.
To find out more about PlanIT and managing off-the-plan developments, click here.
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