AIPP • THE ROLE OF THE DEVELOPER
THE ROLE OF THE DEVELOPER P
roperty developers build and develop properties, resorts and communities, and often work with estate agents who sell the houses and apartments on their behalf. First and foremost you should expect the developer to build properties that as a minimum reach the building code or regulations of the country where the property is located. Don’t forget that regulations and standards will differ from country to country. You should also expect that full planning permissions have been received, or if buying off-plan prior to permissions being granted, this should be made clear and your agreement should state your rights to a refund if permissions are not obtained. Your solicitor can perform due diligence to ensure all such paperwork is in place, and it pays to be aware of the documents of which you should be in receipt.
If you are buying off-plan (literally from the plans, although you may be able to visit a show house) which is the way many properties are sold overseas, you should expect the developer to provide a building schedule for your property. The schedule should be noted in the sales contract, which is legally binding – although the small print will often state any penalties should the build over-run as it sometimes will. In the same documents you should expect a schedule of payment terms which, when you are buying off-plan, will be phased over the build period. For example, two payments of 30% with the balance on completion.
The sales contract should also stipulate where your deposit and stage payments will be held and by whom. Ideally, you will want the funds to be held in escrow, which is an account over which the timing and direction
of release of the money, by the independent third-party escrow agent, will be dependent on certain build stages being completed, or pre-specifi ed conditions met. Your money is therefore protected should the developer go out of business. Lastly, any management fees, and what they are for and include, should also be outlined, though it is likely that a separate management contract will be drawn up for this. Once you have signed a sales contract, you should expect the developer to communicate regularly with you. Most developers will assign you a customer services person who will keep you informed of the build progress of your property. Invariably, you will be directed to a website or blog where photographs and written updates can be viewed at your leisure. If you have any concerns about how the build is progressing, your customer services representative should address them. Lastly, once your home is completed, paid for, the deeds or notary signed and you have the keys to the door, it’s reasonable to expect the developer to make himself available to address any ‘snagging’ issues to your satisfaction.
Top Tips
• Remember that your purchase agreement will be with the vendor. When buying new build or offplan, it is the developer with whom you will be entering into contract
• NEVER sign a binding purchase agreement without seeking comprehensive legal advice
• Your lawyer can perform due diligence on the developer, such as checking that they have planning permission, land title, and any bank guarantees in place
• Find out how the development will be managed once complete, and factor in ongoing management fees
AIPP CONSUMER GUIDE 9
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60