The Real Estate Institute of Queensland (REIQ) have amended their contract conditions which impact essential obligations on buyers and sellers such as
- the settlement date,
- smoke alarms and
- paying a deposit electronically.
If you are a buyer or seller looking to enter into a contract for a house or unit in Queensland after 20 January 2022, you should be aware of the following changes.
1.Settlement Date Extensions
The most important change is the inclusion of a short extension of the settlement date when a party is unable to settle by the settlement date.
A new clause 6.2 has been added to allow either the buyer or seller to extend the settlement date by up to 5 business days by giving notice to the other side before 4:00 pm on the settlement date.
The notice does not have to give a reason for the extension but it must:
- be put in writing; and
- be sent before 4:00pm
Otherwise, it will not be considered an extension notice and the extension may not be granted.
The short extension notice will allow parties additional time to ensure they and their financiers will be in a position to settle by the settlement date and if not, have a small grace period to complete the settlement.
2. New Smoke Alarm Regulations
From 1 January 2022, changes were made to smoke alarm regulations for residential properties being sold. A new clause 7.8 has been added requiring sellers to install smoke alarms that comply with the new requirements before the settlement date.
What does that mean for Sellers?
If the seller fails to install compliant smoke alarms then the buyer is entitled to an adjustment of 0.15% to the contract purchase price on the amount payable at settlement but cannot terminate the contract.
What does that mean for Buyers?
For buyers to ensure that sellers have installed compliant smoke alarms, clause 8.2 has also been amended to allow the buyer to enter the property to inspect whether compliant smoke alarms have been installed.
3. Different Payment Method of Deposit
As deposits are now commonly paid electronically, clause 2.2 has been amended clarifying due dates for electronic payments. As an electronic payment typically takes a couple of business days to clear into the receiver’s account, this clause provides that the deposit is considered to have been paid on the day the buyer makes the payment.
If the buyer chooses to pay the deposit electronically, they will have to provide evidence of payment to the deposit holder (for example a screenshot of the online payment receipt).
If the buyer fails to pay the deposit by the due date the seller can give notice to the buyer to pay the deposit and the seller cannot terminate the contract until after 2 business days from the notice being given to the buyer. This amends the current position where the seller can terminate the contract if the buyer does not pay the deposit by the due date.
4. Matters Affecting the Property
Clause 5.3(1)(e) has been inserted to ensure that if there is a pool on the property, sellers must give buyers a pool safety or exemption certificate to the buyer at settlement unless a notice of no pool safety certificate was given prior to entering into the contract. This puts added obligations on sellers to obtain pool safety certificates before settlement or else buyers can terminate the contract.
Clause 7.5 includes another basis for the buyer to become entitled to terminate the contract. If there is an unrelated services infrastructure on the property that is not protected by a registered easement, Building Management Statement or statutory authority not already disclosed then the buyer may terminate the contract.
What does that mean to Sellers?
This puts increased pressure on the seller to be aware of any third party interests and ensure that any third party interest is at least disclosed and ideally registered on the title as an easement.
If you are a buyer looking to purchase a property, you should ensure your contract terms and conditions include the above updates, as they give both buyers and sellers greater protection to ensure essential contract conditions are complied with and ensure settlement of the contract is completed successfully.
If you have any questions or require assistance with a conveyancing matter in Queensland, please contact NB Lawyers, Lawyers for Employers for more information.
Kayleigh Swift, Associate
Chloe Skubis, Graduate Law Clerk
Tags – #propertypurchase #propertysale #residentialproperty #conveyancing #contract #REIQContract #propertycontract #propertylaw