Property Investment

5 min read3 Dec 2025

What’s the worst-case scenario if I can’t settle my New Build? (and what you can do about it)

Worried you can’t settle your New Build? Learn the genuine worst-case scenario and the practical options investors use to get out of tough situations.

OM 3554 Whats the worst case scenario if I cant settle

Author: Lance Jensen

15 years’ experience in the industry. Active property investor with $6 million+ portfolio. Financial adviser at Opes Partners.

Book free session with Lance

Reviewed by: Ed McKnight

Resident Economist, with a GradDipEcon and over five years at Opes Partners, is a trusted contributor to NZ Property Investor, Informed Investor, Stuff, Business Desk, and OneRoof.

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When you buy a New Build off-the-plans, settlement feels miles away.

You’ve paid the deposit, watched the construction photos roll in, and assumed everything will fall into place.

But a lot can happen in the 12-18 months between signing the contract and paying for the property.

Maybe you’ve been made redundant, had a baby, or interest rates have soared.

Suddenly, the property you were excited about becomes a source of stress. You wonder: “What happens if I can’t settle?”

As a financial adviser who helps Kiwis invest in properties off-the-plans, that’s a question people sometimes ask.

What is the worst-case scenario if you can’t settle a property off the plans?

In this article you’ll learn exactly what happens if you can’t settle your New Build (including the genuine worst-case scenario) and the practical options investors turn to when things go wrong.

Top takeaway:

The worst case is scary, but avoidable. Act early, understand your contract, and you’ll likely find a way out without losing everything.

What’s the worst-case scenario?

When you buy a property off-the-plans you typically pay a 10% deposit. This doesn’t go to the developer, it goes to their lawyer, and they hold it in a trust account until the property is finished.

But if you can’t settle (pay for) your property, in the very, very worst of cases:

you lose your 10% deposit, and
the developer could sue you for damages.

Here’s how it works: let’s say you sign for a property at $800,000 and pay a 10% deposit ($80k).

But during construction the market softens, and you can’t settle. The developer then resells the property, but only gets $700,000 for it.

That’s $100,000 less than what you agreed to pay.

So the developer is $100k worse off. Legally, they can:

Keep your $80k deposit, and
Take you to court for the remaining $20k loss.

That sounds really scary, but you did ask for the worst-case scenario!

Now, does this happen often?

No, not in a sideways or rising market, but it has happened in the past (not to our investors at Opes Partners).

There was the case of a buyer who failed to settle on a $1.16m property.

The developer did find another buyer, but at a much lower price. They then came after the buyer for the difference and a few other costs. They also kept the buyer’s original deposit.

That is the genuine worst case.

The good news is there are steps you can take well before you end up in that kind of territory.

More from Opes:

Option #1 – Nominate the contract

This is the most common and often the cleanest way to get out of a contract if you can’t settle the property yourself.

“Nominating the contract” means someone else takes over your agreement.

They effectively step into your shoes, pay the money at settlement, and become the new purchaser.

To do this your lawyer prepares a simple “deed of nomination.” This says: “Investor A was the original purchaser. Investor B is the new purchaser.”

Now, nominating the property means the property keeps its New Build status. This is a good and a bad thing.

Good because it means the deposit (for the new buyer) stays at 20% and not 30%.

Bad, because you typically nominate at the original price.

So if the property went up in value … you don’t get to keep any capital gains. Those usually go to the new buyer.

And there is still some risk for you. If the person you nominate doesn’t settle, you’re still on the hook.

But, how do you find someone to nominate the contract to? Investors typically find someone through their own network: family, friends, colleagues.

If not, you’ll need one of the next options.

Option #2 – Contemporaneous settlement

A contemporaneous settlement is when two property sales happen at the same time.

Let’s say you’ve bought a property off-the-plans, but you can’t afford to settle it yourself.

So, you find someone else who wants to buy that same property.

Then, on settlement day your buyer pays you the purchase price. You then use their money to pay the developer.

It all happens on the same day, often within minutes of each other, so you don’t have to get a mortgage or come up with any cash yourself.

The great part about this option is you don’t need to get lending. You use the buyer’s money to pay for the property.

So, if your house has gone up in value you might still make money.

And unlike nominating the contract, a real estate agent can find the buyer for you.

You’ll need an agent who specialises in off-the-plans transactions and has a database of ready buyers.

But be aware that the property counts as existing. So your buyer needs a 30% deposit. That’s because the buyer isn’t purchasing directly from the developer.

This can put some people off.

Remember, you’re still legally responsible until your buyer settles. And if you use a real estate agent you will have to pay them a fee.

Option #3 – Ask the developer to on-sell it

The final option is where you say to the developer: “Hey, can you sell this to someone else for me?”

A developer can say “yes” or “no”.

Generally speaking, developers will only agree if the market has moved enough to make it worth their time.

So if the property has gone up in value significantly they might be keen to sell it to someone else for more money (And you wouldn’t typically get any of that money either).

But if it’s gone the other way, they might be more reluctant.

If they do agree, you may not need to find the buyer or need to settle. The developer could take care of the whole thing.

If you think this option might be the right move for you, you’ll need to ask your lawyer to approach the developer.

Do not try any of these options until you do this

This part is really important.

Before you attempt any of the above options you must check your contract to see what you are legally able to do.

You may have signed a contract that means some of these options aren’t available.

For example, if your contract said something like:

“You cannot sell the property to a third party until 3 months after settlement.”
“You may only nominate the contract with the developer’s consent.”

Then you need to get the developer’s permission before you sell or nominate the contract to another buyer.

Developers include these clauses to protect their own selling strategy and pricing. For instance, they might still have properties in the development they want to sell and they don’t want their current buyers competing with them.

So before you take any action get your lawyer to check your contract. You might be restricted in ways you don’t expect.

What is the best option for me if I can’t settle a property?

Well, in all honesty … the best option is not to use any of these options.

Ideally, you settle the property and hold for long-term gains. That’s likely the reason you bought a New Build in the first place.

But life happens, and if it does these are your main escape routes.

Each comes with pros, cons and complexities.

The key is to act early and get advice well before settlement day.

Lance Jensen

15 years’ experience in the industry. Active property investor with $6 million+ portfolio. Financial adviser at Opes Partners.

Lance has over 15 years’ experience in the property industry. He became a property investor at 22, and has since built a personal portfolio worth over $6 million.

Book free session with Lance View Profile

Ok, now for the legal bit:

This article is for your general information. It’s not financial advice. See here for details about our Financial Advice Provider Disclosure. So Opes isn’t telling you what to do with your own money.

We’ve made every effort to make sure the information is accurate. But we occasionally get the odd fact wrong. Make sure you do your own research or talk to a financial adviser before making any investment decisions.

You might like to use us or another financial adviser

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