Delays are not only frustrating for a family looking forward to moving into their new home, but also at times cause serious financial loss.
Buyers of off-plan properties are cautioned to be aware of contract terms and conditions before signing them, especially regarding the date of completion of their new home.
While buying a property off-plan is often perceived as a smart option for people looking for a good deal, unforeseen delays could see them in for “some nasty surprises” if they are not careful, says Wilhelm Jonker, business developer at Paragon Lending Solutions.
The Latin phrase “caveat emptor”, or “let the buyer beware”, is commonly heard in relation to buying property, and although South Africa has been making strides in regulations for the consumer, there are still times when it falls to the buyer to inform themselves fully before agreeing to a sale and signing a contract.
“Over the past few months, Paragon has heard of buyers who have been taken by surprise by delays in off-plan property developments,” Jonker says.
“Typically, off-plan contracts do not stipulate a completion date and will define the occupation date simply as ‘the first day of the month following the month in which the architect certifies that the unit is ready for occupation’. This, unfortunately, leaves the buyer with no enforceable completion and occupation date.”
Delays are not only frustrating for a family looking forward to moving into their new home, but also at times cause serious financial loss. “In some instances, buyers may have already sold their existing property and could incur occupational rent fees, or even need to find another place to stay while they wait.
“Extended delays could also impact their finance for the new development as lenders will be looking to capitalise their loan as soon as possible and may not be prepared to wait months for a late occupation.”
However, Jonker says it is rare that a developer would willingly delay completion, particularly as off-plan development grows in popularity, especially in the main centres such as Joburg, Cape Town and Durban. He says developers trade on their reputation in these competitive markets.