Off-Plan Assignment Defaults: How Cash Investors Approach Distressed Deals Before Handover, and How to Do It Safely

1. The seller's identity and right to sell, matched against the sale and purchase agreement and the developer's records
2. The project's registration and the developer's licence, through official channels
3. The payment schedule and receipts, showing exactly what has been paid and what remains due
4. Any arrears, penalties or notices from the developer, and who will clear them
5. The developer's resale conditions, including the minimum paid amount, approval process and fees
6. The unit details, including floor, size, view, specifications and handover date
7. Any mortgage or lien on the unit
8. The escrow account details for future payments, confirmed through official sources
9. The comparable prices for similar units, to judge whether the discount is real
10. The total cost, including remaining instalments, fees and transfer costs
11. The contract terms, including delay, default and termination provisions

Pricing: Is the Discount Real?

A distress price only has meaning against the right benchmark. To judge it:

• Compare with the developer's current price for similar units, since the developer may be selling at a different price today
• Compare with other resales in the same project, with similar floor, view and size
• Add up everything you will pay: the price to the seller, remaining instalments, developer fees, registration and transfer costs
• Compare the all-in figure with the likely value of the unit at handover
• Allow for a downside case, in which prices are flat or lower at completion

If the all-in cost is not meaningfully below the likely market value, the discount may be an illusion. Buyers researching distressed properties for sale should be especially sceptical of a price that looks far too good, because that often signals a problem.

Risks for Cash Investors

• Developer approval risk. The transfer may be refused or delayed.
• Documentation risk. Missing or inconsistent paperwork can derail a deal.
• Hidden cost risk. Arrears, fees and penalties can erode the discount.
• Delivery risk. Construction may be delayed, or the specification may differ from what was promised.
• Market risk. Prices and rents can fall between purchase and handover.
• Liquidity risk. Reselling an assignment can be harder than selling a completed unit.
• Counterparty risk. The seller or an intermediary may not be what they claim.

Only invest cash you can afford to tie up for longer than planned.

A Note on Fair Dealing

Distress sales involve real people under real pressure. Investors who buy from them should deal fairly and transparently: explain the process honestly, pay a price that reflects the unit's value and the speed on offer, and complete the transaction through official channels. Not only is this the right way to behave, it also reduces legal and reputational risk. For sellers, getting independent advice before accepting an offer is sensible, particularly if you are under time pressure.

If You Are the Seller Considering an Assignment

If you are the original buyer and thinking of exiting: