Protecting your interests and deposits – Ralan Group Collapse
Recent ABC News reports detail the property developer Ralan Group’s collapse and indicate that some buyers could lose their deposits. How can that be?
In Queensland the law requires payments including deposits for off the plan apartments to be held in an agent’s or lawyer’s trust account until either party is entitled to the deposit. From the news reports it seems the buyers agreed to lend the deposits to the developer on high interest return to use for its purposes including construction. When the Ralan Group collapsed those buyers only have a right to claim the return of the deposits from the developer and, as the company has gone into administration, there are insufficient funds to pay creditors, so those buyers may receive nothing in return. If the building is complete, like the Ruby building on the Gold Coast, then the buyers may still have the opportunity to proceed with the purchase and obtain an investment property. However the intent of the law is to protect deposits.
When the property market is booming often the demand for new apartments exceeds the supply so to fill the demand off the plan sales were invented. The concept is simple – a special contract is prepared to buy an apartment not yet in existence but to be constructed on land. The law lagged behind the demand and the current legal framework for off the plan purchases is very complex. The contracts must include a large amount of disclosure and additional information and protections for purchasers which means the contracts with disclosure statements can be over 100 pages.
In Queensland off the plan sales are a popular method of selling apartments and this method has been successfully employed by many developers and happy investors. McLaughlins Lawyers have been involved acting for developers for the Paradise Centre, many high rise buildings and resorts to duplexes and low rise developments. In fact expert lawyers at McLaughlins have been part of the development of the law governing off the plan purchases for many years.
We also have acted and continue to act for many buyers of off the plan apartments. There are many benefits, like choosing your colour scheme and input into inclusions and that you get a brand new apartment as soon as it is complete and ready to settle. Also foreign buyers may be able to buy new apartments whereas established homes or 2nd hand apartments would not qualify for Foreign Investment Review Board “FIRB” approval. There are risks and we regularly advise buyers so they are fully informed. Our current property and commercial team have over 30 years experience and have helped buyers and sellers successfully negotiate the complex laws.
If a buyer from the Ralan Group came to us for advice our review of the contract documents could have discovered the risk and protected those buyers from loss.
If you have an off the plan contract and are concerned call Teresa Kearney for help. If you are looking at buying any property especially off the plan apartments and need advice or help concerning your property or commercial matter, or if you are a developer wanting to market and sell off the plan apartments please ask for Teresa Kearney, Senior Associate.
McLaughlins Lawyers, your experienced Gold Coast lawyers, we stand beside you.
Author: Teresa Kearney
Director: Ian Kennedy
Date: 20 September 2019