The Houses and Land Contract 17th ed and Residential Community Title Contract 13th edition were released by the Real Estate Institute of Queensland (REIQ) and Queensland Law Society (QLS) in January this year. The significant changes made to the contracts will have an impact on agents, buyers, and sellers.
Queensland real estate agents are grappling with a series of changes made to standard residential property contracts prompted by the Covid pandemic.
The amendments, made by REIQ in deliberation with the Law Society, affect contract extensions, smoke alarms, pool certificates, and seller warranties, and are applicable to any sale made from January 20, 2022, onwards.
While some agencies welcomed the changes, others had the opinion they would impede transactions, causing hold-ups and leaving sellers and real estate agents open to potential litigation based on a technicality.
REIQ has defended its position in making these changes but admitted it had been a complex issue to navigate.
In general, the changes place more obligation on sellers to provide additional documentation such as safety certificates and land searches ahead of listing their homes.
One clause that has caused distinct concern is the right for a buyer or seller to request a five-day extension anytime up to 4pm on the pre-agreed settlement date. After that, the buyer must request extensions in writing, which applies equally to auction contracts.
The case that sparked it all was Brisbane couple Mark Trau, 30, and his fiancée Maddie Goyder, 27, who lost the entirety of their $75,000 deposit after their bank, Westpac, missed the settlement deadline for the Jindalee property they wanted to buy.
The sellers rejected two pleas by Mr Trau for an extension before the settlement date.
The banks provided the paperwork less than the 24-hours post-deadline, but by that stage it was too late.
The vendors terminated the contract and kept the deposit, as was their legal entitlement. They then resold their home within hours of the deal falling apart for $65,000 more than what Mr Trau and Ms Goyder had offered.
Westpac eventually reimbursed the couple for their loss.
Amendments to Contracts from January 20, 2022:
If you are a real estate agent, buyer or seller looking to enter a contract for a house or unit in Queensland after January 20 2022, you should be aware of the following changes:
- The definition of “Contract Date” has been modified to accommodate the signing of electronic contracts in Realworks.
- The ability of either party to acquire a brief extension to a settlement when unable to settle due to financier inaction, delay, or any other reason. The new clause 6.2 responds to recurring difficulties for buyers unable to settle on time, leading in some cases to contract termination. In addition, this change to “time of the essence” will alleviate the circumstance where buyers are potentially unfairly affected by delays outside their control.
- New smoke alarm clause 7.8, responding to modifications to the Fire and Emergency Services Act 1990 and Building Fire Safety Regulation 2008 on January 1, 2022. The new clause will obtrude a contractual obligation on the seller to install smoke alarms in compliance with the new requirements while not delaying settlement.
- Express provision for deposit payment by direct debit and a grace period.
- Allowed to address the impact of delays when depositing money to accounts when using direct debit.
- Amendments to the Pool Compliance Certificate obligations. A seller is required to provide a pool compliance certificate for a private pool on the land at settlement. The only exception is if a Notice of No Pool Safety Certificate is given to the buyer before the contract.
- Seller warranties in clause 7.4 have been renumbered, and there has been the addition of a new warranty. The seller will now warrant that they have not received notification from a proficient authority that may result in the issue of a show cause or enforcement notice or a notice to commence work referred to under clause 7.6. The reason for the addition of the new warranty is that, in practice, local governments correspond with owners for a reasonable period without purveying a formal non-compliance notice. On notification of the proposed sale of a property (usually when a buyer does a search) council may purvey a formal notice, which under the previous clause 7.6 is the buyer’s responsibility. This seems unfair, and the new clause is intended to overcome this issue.
- Amendments to clause 7.5 relating to services infrastructure on the land not related to services provided to the land. Including a new right to terminate if infrastructure not related to the delivery of services (gas, electricity, water, etc) to the land pass through the land and is not protected by a registered easement, BMS or statutory authority been disclosed to the buyer.
- Amendments to clause 7.6 change regarding the responsibility for notices to do work. Depending on when the notice is issued, compliance with the notice is required and whether the seller discloses the notice to the buyer before contract.
The importance of completing a contract correctly
It is always best to avoid disputes arising and any misunderstandings from the start. When buying and selling property, it cannot be understated how important it is to have a suitably qualified property lawyer review the contract during the sale process and ensure the buyer and seller have a complete understanding of the terms and conditions enclosed in the contract.
Understanding the different roles lawyers and real estate agents play in conveyancing is essential.
Lawyers are conveyancing experts trained in this specific area of law and hold the competence to lead buyers and sellers, through a transaction ensuring their interests are preserved and the deal is able to proceed to settlement without any nasty surprises.
Agents need to ensure that they are up to date with the recent changes to the REIQ contract. If you are unaware of your client’s rights and obligations under the contract, this could be detrimental to their sale or purchase and impact the deal.
Agents must use the new versions of the residential contracts from January 20, 2022. The new editions of the REIQ contract do not affect contracts existing prior to January 20 that have not yet been settled.
Attwood Marshall Lawyers – providing trusted property law services to give greater certainty of a successful, on-time settlement
Attwood Marshall Lawyers is a leading property and commercial law firm that specialises in electronic conveyancing. As a PEXA certified practice, we assist both buyers and sellers, and real estate agents, with property transactions, ensuring they happen safely, securely, and on time.
With our head office located right on the QLD-NSW border at Coolangatta, we are able to assist with property transactions in both Queensland and New South Wales. We also have offices in Robina Town Centre, Kingscliff, Brisbane, Sydney and Melbourne. Our experienced conveyancing team ensure new home buyers and property investors receive the most professional property law services when making their purchase.
Our Robina Town Centre office is open Thursday nights and Saturday mornings for your convenience. So, contact us if you need property advice or a contract review outside of standard business hours.
Call 1800 621 071 any time, or contact Property and Commercial Department Manager, Jess Kimpton, on direct line 07 5506 8214, mobile 0432 857 300 or email firstname.lastname@example.org to make a booking with one of our property lawyers today.