You may have seen a lot of press in 2021 about young first home buyer couples having their contract terminated and their deposit taken by unreasonable sellers because the buyer failed to settle on time. This article by Matt Dolan (lawyer) outlines key changes to standard residential contracts in Queensland.
New standard term residential contracts
Not long after this latest round of negative press about Queensland real estate laws, the Real Estate Institute of Queensland (REIQ) announced new standard term contracts for residential properties. These new contracts are for use from 20 January 2022.
Most significant change
The most significant change is the insertion of rights for both the buyer and seller to extend the date for settlement by up to five business days after the scheduled settlement date. The REIQ and Queensland Law Society have indicated this change was introduced in response to buyers losing their deposits where contracts have fallen over at the last minute because of delays caused by incoming financiers. However, the changes are not limited to that circumstance. The new standard terms will allow a buyer or a seller to simply give notice to extend the settlement date without any restrictions and without the need to provide any supporting evidence.
In addition, there are some other significant changes as follows:
- Smoke alarms: A new contractual obligation on sellers to install smoke alarms that comply with the new smoke alarm regulatory requirements that commenced 1 January 2022. Failure by a seller to install a compliant smoke alarm by settlement will result in a buyer being able to claim an adjustment at settlement equal to 0.15 percent of the purchase price.
- Direct debit: Allowing payment of deposits by direct debit and providing a grace period to address the impact of delays in the receipt of money into accounts when using this method.
- Pool compliance: Amending the pool compliance certificate obligations to require a seller to hand over a copy of the certificate at settlement. The only exception to this requirement is if a notice of non-compliance is given to the buyer prior to contract. Failing to hand over a pool compliance certificate at settlement will result in the seller not being ready, willing and able to settle and the buyer may terminate the contract and seek damages.
- Seller warranty: Inclusion of a new seller warranty stating the seller has not received any communication from a competent authority that may lead to the issuing of a show cause notice, enforcement notice, or notice to do work. This warranty requires a seller to disclose communications with the local government about work to be done on the property. The remaining warranties have also been reorganised into those that are accurate on the contract date and those that are accurate on the settlement date.
- Infrastructure: New rights for a buyer to terminate if infrastructure unrelated to delivery of services (eg gas, water, electricity) passing through the land are not protected by a registered easement, building management statement, or statutory authority that has been disclosed to the buyer. A seller will need to disclose the existence of infrastructure located on or under the land that does not provide a service to the property.
- Notices to do work: Amendments to change the responsibility for notices to do work, depending on when the notice is issued, when compliance with the notice is required, and whether the notice is disclosed by the seller to the buyer prior to contract. A seller can be relieved of their obligation to complete works if it is disclosed to the buyer prior to contract, otherwise the seller is responsible for complying with notices if issued prior to contract.
The above is not an exhaustive list of the changes and is only a summary of the key amendments. At this time there are no changes proposed to the standard REIQ commercial contracts.
If you are looking to buy or sell residential property, you should review the new terms carefully before signing. Reach out to a member of our Real Estate team if you have any concerns or questions, or if you require changes to be negotiated.