Big Changes For QLD Residential Property Transactions
Posted by: Tom Wood | Date: 22 May 2014
At FC Lawyers we have grappled with the Property Agents and Motor Dealers Act (“PAMDA”) since it started in 2000. On 6 May 2014, the Property Occupations Act (“POA”) was passed by the Queensland parliament. The new legislation ends the 14 year reign of PAMDA and has been greeted with relief by most in the property industry and market.
PAMDA was introduced to protect the consumer, but has been criticised for being burdensome and technical. The new Act significantly reduces the red tape associated with the old regime and will be welcomed by those in the property industry. Some consumer protections have been removed or simplified, but the overall effect is to reduce uncertainty. In general, we think that parties to real estate transactions should be relaxed about the changes but still seek legal advice.
Who will be affected?
- Buyers and sellers of residential property
- Real estate agents
- Property developers
- Body corporate managers.
Some key changes regarding property transactions
- Agents and sellers are no longer required to direct the buyer’s attention to the famous “Warning Statement”, and the PAMDA Form 30c is no longer required. Instead, the contract itself will contain the warning about obtaining independent valuation and legal advice, and advice that a statutory cooling off period applies.
- For units, the Form 14 Information Sheet will no longer be required.
- A failure to comply with the technical requirements no longer allows the buyer to terminate the contract or seek compensation. Instead, a breach of the new legislation attracts government fines of up to $22,000.00 for an individual, or $110,000.00 for a corporation.
- A buyer will no longer be required to consult a solicitor in order to waive or shorten the statutory 5 business day cooling off period. The PAMDA Form 32a lawyer’s advice certificate will be abolished.
- Agents will no longer be required to disclose commissions to buyers. The PAMDA Form 27c will be abolished.
- Agents will be permitted to disclose that a reserve price has been set for residential property proposed for auction, although not the price itself. Agents must also not disclose a price that they consider likely to result in a successful bid, or any other price guides. Agents who do not comply face a penalty of up to $60,000. This change has received significant criticism.
- The definition of residential property will be simplified.
Appointment of agents
- The nine existing appointment forms will be reduced to a single form.
- The limit on lengths of appointment for an exclusive agency will be increased from 60 to 90 days.
- An end date for a continuing appointment will no longer be required.
- There will no longer be a requirement to specify how services are to be performed.
- Restrictions on maximum commissions will be abolished.
- Property developers and their employees will no longer be required to be licensed;
- Auctioneers will be required to hold an auctioneers licence;
- Persons acting on behalf of ‘sophisticated clients’ (such as shopping centre developers) will be exempt from the new Act. A sophisticated client will be defined by the regulations and will be based on the total floor area of the non-residential property or the estimated value of the property.
Cooling off changes
A buyer will now be able to waive the cooling off period by merely giving written notice to the seller. Signing an unconditional contract will really mean unconditional, and buyers will be locked in.
Under PAMDA, the cooling off period does not apply to contracts entered into by auction. The POA extends this to a period of two days after the auction, where a registered bidder enters into a contract after auction.
It is therefore more important than ever to obtain legal advice prior to signing a contract. We can handle this quickly and commercially.
When will this happen?
The POA is expected to take effect in late June or July 2014.
As part of a transitional period, contracts that are entered into prior to commencement of the new legislation will remain subject to PAMDA requirements. Accordingly, if a buyer has a right to terminate a contract under PAMDA, these rights will be unaffected.
If you have any questions about property transactions or anything above, please contact our property team today.
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