A bad plan

20 July, 2018

A critical issue for any purchaser of an ‘off the plan’ property is ensuring the actual property accords with what they intended to purchase. Therefore, when giving pre-contractual advice to purchasers, it is essential to identify any deficiencies in documentation that could hinder a proper assessment by the purchaser.

In one claim, the practitioner was retained by a purchaser to provide pre-contractual advice regarding an ‘off the plan’ townhouse and then act in the conveyance. The practitioner gave advice over the phone in a 30-minute telephone conversation but did not record what advice was given by way of file note.

At an inspection before settlement, the purchaser noticed the townhouse did not have a powder room on the first floor. The plans the selling agent provided to the purchaser showed there was a powder room on the first floor but this was not reflected in the council-endorsed plans incorporated in the contract (Plans). The Plans were grainy and illegible.

The purchaser proceeded with settlement under protest before issuing a VCAT application against the selling agent and the practitioner. As well as alleging misleading and deceptive conduct against the selling agent, the purchaser alleged the practitioner should have advised the Plans were illegible and the purchaser should request a legible plan. It was alleged that had this been done, the purchaser would have become aware the Plans did not include a powder room on the first floor and were materially different to the plans on which the purchaser was relying to buy the property.

The practitioner could not recall giving that advice and his file note was of no assistance. He needed to:

  • identify that the Plans were illegible and appreciate the possibility of potential implications for the purchaser
  • advise the purchasers about the illegibility of the Plans and record the advice in writing.