Updated 28 October 2026
Off the Plan Potential Problem #13: Dispute Resolution
CM Lawyers off-the-plan purchase services
Buying off the plan commits you to a property before its final form and value can be assessed. Delays, defects, changed specifications and finance problems can turn an anticipated home or investment into a dispute. A declining market adds pressure because the purchase price may remain fixed while the property’s value falls.
This guide explains how to identify the problem, preserve your rights and choose an appropriate resolution process in NSW. The starting point is the contract: have a lawyer check it before signing and again before withholding settlement or attempting to withdraw.
Why a declining market creates settlement risk
An off-the-plan purchase can involve a long gap between exchange and completion. If comparable properties become cheaper during that period, your agreed price does not automatically reduce. A fall in value alone generally gives you no right to cancel or demand a discount. Check the NSW Government’s off-the-plan guidance before committing.
The funding risk is immediate and practical. A lender may value the completed property below the contract price and reduce the amount it will lend. The buyer must then find additional funds to complete. The Reserve Bank’s explanation of apartment settlement risk describes this mechanism; its historical discussion is not a forecast of today’s market.
Pre-approval obtained before construction is not a promise of funding years later. The lender may reassess the finished property and your financial position. Changed income, debts, interest rates or lending criteria can affect approval. Ask your lender when approval expires, what remains conditional and how it will assess the property at completion.
A valuation shortfall: worked example
Consider a hypothetical $1 million purchase, with a $100,000 deposit already paid. The buyer expects an $800,000 loan and plans to contribute another $100,000 at settlement, excluding transaction costs. If the completed property is valued at $900,000 and the lender advances only 80% of that value, the loan becomes $720,000.
The buyer now needs $180,000 at settlement towards the price: $1 million less the $100,000 deposit and $720,000 loan. That is an extra $80,000 beyond the original plan, plus duty, legal fees and adjustments. The figures illustrate an assumed lending limit, not a universal bank policy.
Stress-test a lower valuation before exchange. Keep a genuine cash buffer and consider whether another property you plan to sell could also fall in value. Do not rely on future capital growth to supply the money needed to settle.
Walking away may cost more than the deposit
If a buyer defaults, the seller may retain or recover the deposit and pursue additional damages, interest and costs. The contract, validity of termination, evidence of loss and steps taken to reduce that loss matter. A deposit is not necessarily the limit of liability.
In STM123 No. 16 Pty Ltd v Wang [2025] NSWSC 444, an off-the-plan Point Piper apartment was contracted for $16.5 million. The purchaser paid $825,000 but failed to pay the remaining deposit instalment and comply with completion notices. Following termination, the apartment eventually resold for $12.82 million.
On the particular marketing and valuation evidence, the court used the later resale price to assess damages and credited the full $1.65 million deposit, including the unpaid balance already subject to an earlier judgment. It ordered a further $2,425,534.54, including prejudgment interest, plus costs. The decision demonstrates the exposure from default in a falling market; it does not establish that finance refusal caused this purchaser’s default.
Check the rights that actually apply
Residential off-the-plan contracts generally have a 10 business day cooling-off period. Withdrawal during it ordinarily costs 0.25% of the price. A section 66W certificate can waive or shorten that protection; auction-related exceptions also apply. Ask your lawyer to confirm the deadline and any waiver before exchange.
Different rights may arise when disclosed plans or specifications change. Under the statutory regime, a purchaser seeking rescission for a material change must show both material prejudice and that they would not have contracted had they known. Rights generally must be exercised within 14 days of receiving the notice of changes or registered documents revealing the relevant inaccuracy. An eligible purchaser may instead pursue compensation capped at 2% of the price, with disputed compensation referred to arbitration. This is not compensation for a general market fall.
The final registered plan and associated documents must be provided at least 21 days before settlement. Deposit and instalment money must remain with the stakeholder in a trust or controlled money account during the contract period. These protections do not eliminate the buyer’s obligation to complete.
Check delay and sunset provisions separately. A developer generally needs the purchaser’s consent or a Supreme Court order to rescind under a sunset clause. Other termination clauses require separate analysis. An expected completion date passing does not, by itself, establish a right to walk away.
Start with evidence and a workable proposal
Send your lawyer the signed contract, disclosure statement, variations, notices, correspondence and finance documents. Prepare a dated chronology and identify the outcome sought: rectification, clarification, an extension, a price adjustment or an agreed release. Preserve advertisements and written representations if you believe the property was misdescribed.
For a funding shortfall, contact the lender promptly and obtain a realistic assessment of available funds. Your lawyer can approach the seller about an extension or negotiated resolution. The seller need not agree. Any arrangement should record revised dates, interest, costs, deposit treatment and whether further claims are released.
Keep contractual deadlines under review while discussions continue. Negotiations do not automatically suspend a notice to complete or limitation period. Avoid announcing that you will never settle, signing a release or withholding money before obtaining advice about the consequences.
Choose the appropriate dispute process
Mediation can help parties negotiate with an independent facilitator. The mediator does not decide who wins. An agreement can be documented in binding settlement terms and, in proceedings, reflected in enforceable court orders. The Supreme Court’s mediation guidance explains the process. Compare a proposed settlement with the likely costs and risks of continuing the dispute.
Use the correct complaint channel. NSW Fair Trading’s role in off-the-plan purchase complaints concerns selling-agent conduct; it is not a general decision-maker for sale-contract disputes. Building Commission NSW provides home-building complaint pathways and exercises building regulatory powers. These services do not automatically cancel a purchase or secure compensation for falling values.
NCAT’s home-building jurisdiction concerns eligible disputes about residential building work, including defects. Applicable claims generally require prior referral to Fair Trading, subject to exceptions. A land-sale termination dispute is not automatically an NCAT home-building claim. Your lawyer should identify the appropriate court, tribunal or contractual process, the correct defendant and the relevant time limits.
Construction security-of-payment adjudication has a different purpose: resolving contractors’ progress-payment disputes. It is not a general procedure for an off-the-plan buyer seeking cancellation or a deposit refund. Distinguish it from the statutory arbitration pathway for compensation arising from qualifying changes to disclosed particulars.
Reduce the risk before exchange and completion
Have the contract, disclosure documents, variation clauses and completion triggers reviewed before exchange. Check whether finance protection exists and what it actually covers. Investigate the developer and builder, inspect comparable completed properties and obtain independent advice about value. A display suite, rental guarantee or sales forecast should not replace your own assessment.
As completion approaches, refresh finance arrangements and arrange an appropriate inspection. Record defects with photographs and an independent report where warranted. Ask whether each defect affects the obligation to settle or creates a separate rectification claim. For strata property, distinguish defects within the lot from common-property issues that may require owners corporation involvement.
For help reviewing an off-the-plan purchase or responding to a dispute, contact CM Lawyers. Early advice can clarify available remedies and prevent a negotiable problem becoming a settlement default. Always have a lawyer check the proposed action against your particular contract and circumstances.
General information about NSW residential off-the-plan purchases only, not advice on a particular contract. Always have a lawyer check your circumstances and proposed action; obtain lending and financial advice where needed.
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