Buying off the plan

Buying ‘off the plan' is when properties are advertised for sale before they’ve been built. You may be able to inspect a demonstration property to get a sense of the final product.

What your developer must do

If building work hasn’t yet started, your developer isn’t required to provide the certificate of insurance but your contract with them must state that:

  1. There is an exemption from the requirement to provide a certificate of insurance
  2. Insurance under the Home Building Compensation Fund will be in place before the start of work.
  3. They will provide you (the buyer) with the certificate of insurance within 14 days of the insurance being taken out.
  4. You (the buyer) can cancel the contract of sale before settlement if the certificate of insurance is not provided within 14 days of the insurance being taken out.

You should also look at clause 61 of the Home Building Regulation 2014 which sets out the requirements in detail.

If building work has started, a copy of their certificate of insurance must be attached to the contract of sale. This is your proof that insurance has been taken out.

The developer does not need to provide a certificate of insurance for construction of a multi-storey building.

A multi-storey building has more than three storeys and contains at least two separate dwellings, however you must read the Home Building Regulation 2014 (particularly clause 56) to get a full explanation of how a 'multi-storey building' is defined under the legislation.

You can check the validity of a builder's or trandesperson's certificate of insurance by using the certificates register.

A contract for home building compensation insurance covers you for six years for major defective work and two years for other losses. Time starts from when the work was completed.

You can make a claim if the builder or developer has:

  • become insolvent
  • died or disappeared, or
  • the builder's licence is suspended for failure to comply with an order to pay money made by a Court or Tribunal (only if your policy was issued on or after 19 May 2009)

Further information

Warning to buyers

A contract could be completed before the building work is finished and before any insurance is taken out.

Where a contract of sale is completed and settled, the legal right to cancel the contract no longer applies.

When you buy off the plan, you are paying for a property where the end product may not only differ from your expectations, but be worth less than what you originally paid by the time it is finished.

If you are thinking of entering into a contract to buy premises not yet built, exercise caution and gain appropriate legal and other advice before signing any documents or paying any money.

What you can claim for

All insurance policies issued from 1 February 2012 provide a cover of $340,000. See current scheme and cover for more information.

Making a claim

Visit making a claim for more information on the full claims process.