If you have ever purchased or sold property in Queensland, you’ve likely cast your eyes over the red and white contracts developed by the Real Estate Institute of Queensland (REIQ).
REIQ have this year released new editions of their residential contracts (for houses or land and for units). We have summarised the REIQ’s new changes below:
Settlement extension
The amended terms of the REIQ contract allow either the Seller or the Buyer to obtain an extension of the original settlement date under the contract of up to 5 business days in circumstances whereby a party is unable to settle for any reason. This can be done by notifying the other party before 4pm on the date of settlement, and you do not need to provide a reason for doing this.
In the previous version of the contract, if you could not settle by 4pm on the original settlement date, you would have to request an extension and the other party would have to agree to it (which they are not obliged to do).
Any extensions longer than 5 business days will still need to be agreed to by the other party.
Whilst this is a welcoming change that lowers the chances of the Buyer’s or the Seller’s lender not being ready to settle (or any other unforeseen reason) due to no fault of either party, in practice it can cause some difficulties.
For example, if you have planned to move on the original settlement date and have movers booked, you need to be aware that there is a chance that settlement can be extended right until the last minute by the other party. Please take this into account when making moving preparations.
If you do not wish for the extension to be an option automatically (without your agreement), please get in touch with us and we can discuss the possibility of deleting the clause from your contract. Further, if your contract is signed and you think you may need to extend the settlement date, please advise us, and we can walk you through the process.
Smoke Alarms
Sellers are now required to ensure they have compliant smoke alarms installed to meet the criteria under the Queensland Fire and Emergency Services Act 1990. If the Seller has not installed compliant smoke alarms prior to the settlement date, the Buyer can claim 0.15% of the purchase price and have it paid by the seller at settlement. Additionally, the contract provides for an additional reason for the buyer to access the property, which is the opportunity to access the property specifically to inspect smoke alarms.
Requirements of ‘compliant’ smoke alarms include, but are not limited to, being photoelectric, interconnected and installed in each bedroom.
If the property is purchased with non-compliant smoke alarms, the buyer will become responsible for installing compliant smoke alarms in accordance with legislation following settlement. Failure to have compliant smoke alarms installed can subject the owner of a property to penalties.
Pool Safety Certificate
If the property has a pool, the Seller must now provide a Pool Safety Certificate prior to the settlement date. If they do not, the Buyer may terminate the contract. This only applies for non-shared pools, rather than shared pools in a community title scheme, whereby the body corporate is responsible to maintain current Pool Safety Certificates.
The only exception this rule is if the Seller has provided a Notice of No Pool Safety Certificate to the Buyer prior to the contract being signed, in which case the Buyer must obtain a Pool Safety Certificate 90 days from the Settlement Date.
Seller Warranties
A new Seller warranty has been added to the contract whereby the Seller warrants that they have not received any communication from a competent authority that may lead to the issuing of an enforcement notice or notice to do work on the property. The reason for adding this is that in practice, local governments correspond with owners for a considerable period without issuing a formal notice. This means that if the Seller has been corresponding with a local authority or similar in relation to a potential issue, it must be disclosed to the Buyer before signing the contract.
Contract Date
The final change is a practical one, which has changed the definition of the ‘contract date’ to be the date that the last party signed the contract, in the event that it hasn’t been dated, as sometimes the contract date is forgotten to be inserted once all parties have signed.
Our property team is ready to assist if you have any questions and wish to know if the above changes apply to your contract of sale. We note that not all contracts are REIQ contracts, and some contain special conditions that may vary the standard clauses in the contract. We recommend sending us a copy of your contract to review prior to signing.
Please contact FC Lawyers if you would like any assistance with your purchase or sale of a property in Queensland or if you have any questions regarding the new changes in the REIQ contracts.
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