- August 8, 2021
- Posted by: Admin
- Category: Legal
As a property lawyer, it is quite apparent that the current housing market is unable to meet the demands of potential buyers. Many developers sought to rectify this problem by offering properties for sale pre-construction. This means that interested purchasers would enter into an agreement with the developers to buy properties before they are actually constructed. The purchaser would buy based on an architectural design and a plan. In some cases, a model unit is presented to the buyer.
Obviously purchasing a property that has not yet been developed, is way more complex than purchasing a completed property. Therefore it is highly recommended to seek the advice of a real estate attorney to assist with this decision. Your real estate lawyer will advise you based on the factors below.
The Reputation of the developer
Your property lawyer should know that the most important factor when considering purchasing pre-constructed real estate is the reputation of the developers. Too many people enter into contracts for the purchase of homes with so-called developers only to find themselves in court suing for their deposit because the developer failed to deliver and in more extreme cases the developer has completely absconded with their deposits. Your real estate lawyer should check to ensure that the developer is registered under the Real Estate (Dealers and Developers) Act? Every developer who proposes to carry out a development scheme within the meaning of the Act and section 36 is re required to register with the Real Estate Board as a developer. Failure to do is an offense under the act which gives rise to criminal liability. Conducting business with an unlicensed developer will leave you without the protection offered to purchasers under the Act.
Examine the Model Home and Construction Plan
The construction agreement will make reference to the building plan. The developers will propose to construct the buyer’s unit in line with the construction plans. It is therefore important to examine the construction plan.
Completion Time
The real estate attorney will take into account the proposed completion date for construction. Sometimes these contracts do not have a proposed completion date but a good real estate attorney will negotiate for a completion date to be included in the contract taking pf course into account delays due to weather conditions, civil unrest, etc.
Forfeiture Cluse
In any agreement pertaining to the purchase of real estate, your real estate attorney should always be looking out for a forfeiture clause. This clause usually provides that in the event that the purchaser fails to complete the sale, the purchaser would lose his or her deposit. While a purchaser under an ordinary agreement for sale can do his or her due diligence to avoid this clause taking effect. However, under an agreement for sale for construction, the developers normally have a clause in the agreement for sale that allows for the escalation of the purchase price due to an increase in the cost of materials, labor, or other factors.
- Defect Liability period
Since the property is new construction, it is not uncommon for there to be minor defects. Your attorney should negotiate to have a defect liability period for the purchaser to bring forth to the developer any defects within certain days after the purchaser occupies the property. A reasonable time would be one year. These factors are not exhaustive and are just a few considerations