One of the last sections to complete on a contract is whether electrical safety switches and compliant smoke alarms have been installed in the property. Because it is one of the last sections in the contract, it can be tempting to tick the compliant box in haste. But this is not a section of the contract that can be quickly glossed over as the failure to complete the section correctly can cost both parties up to thousands of dollars to fix a hastily error of judgement.
Why is it important to complete this section correctly?
Besides the obvious benefits of saving lives, it is the law to have an electrical safety switch and compliant smoke alarms installed in the property.
The seller not only notifies the buyer whether compliant safety switches and smoke alarms have been installed, but this is also notified to the relevant city council on the Transfer documents. The transfer form that is to be completed by the seller requires the seller to advise whether compliant safety switches and smoke alarms have been installed. It must also outline whether the buyer has been notified on their compliance/non-compliance. This allows the council to quickly confirm whether properties are compliant with current laws, which is more relevant now as new smoke alarm legislation came into effect on 1 January 2022. Please see item 2 of our previous article we drafted regarding this.
The problem with non-compliant safety switches and smoke alarms
Smoke Alarms
There are short and long term financial penalties for failing to have compliant smoke alarms in your property before selling. While a buyer cannot terminate a contract because the property does not have a safety switch or compliant smoke alarms, the following financial implications apply:
- the Real Estate Institute of Queensland (REIQ) contract allows a settlement adjustment in the buyer’s favour of 0.15% of the purchase price if the seller does not install compliant smoke alarms by the settlement date; and
- the council can fine both the buyer and the seller for not having compliant smoke alarms.
Safety Switch
If a safety switch has not been installed while the seller owned the property, then the buyer must install one within 3 months of settlement. Failing to install a safety switch within that time may result in a fine to the buyer.
Takeaways
The failure to have a safety switch in the property puts the responsibility solely on the buyer to ensure one is installed or else risk a fine.
With the new smoke alarms legislation requiring all dwellings, caravans and motorhomes to have compliant smoke alarms no later than 1 January 2027, there are greater responsibilities on the seller to ensure new smoke alarms are installed in the properties. If not then the seller is at risk of being fined retroactively for not having compliant smoke alarms and may have some of the settlement monies withheld to pay for the cost of installing smoke alarms.
If you have any questions or require assistance with a conveyancing matter in Queensland, please contact the property team at NB Lawyers for more information.
Written by
Kayleigh Swift, NB Property Law Director
[email protected]
(07) 3876 5111