buying or selling a house?
You may have heard of changes made in new editions of residential REIQ contracts released in January 2022. Some of these changes have the potential to delay or even lead to termination of your contract if not addressed.
So, what do you need to know?
Extensions of settlement date
This change has created a good deal of discussion. Partially in response to press reports of instances where buyers lost their deposits due to banks being unable to settle on time, a new Clause 6.2 has been added.
Under the new clause, either party may unilaterally give notice up to 4pm on the Settlement Date extending settlement for up to 5 Business Days (i.e. one week). No reason need be given. This does not only apply if the party is unable to settle due to delay on the part of its financier.
It is important to note that parties cannot rely on this clause to extend other critical dates and conditions (such as due diligence or building and pest inspections).
This change might have unfortunate consequences in cases such as where parties are relying on e.g. contemporaneous settlements of other properties, particularly if another contract does not contain a similar clause.
You can imagine the consequences if just prior to 4pm on the Settlement Date the Buyers, with all their furniture in a removalist truck outside the residence, gets notice settlement is not taking place that day !
This new clause may potentially significantly change the ‘time of the essence’ certainty long associated with property transfers in Qld.
If the certainty of the settlement date is important to you, please let us know before you sign a contract.
Other important changes to note include:
Smoke Alarm Obligations - Sellers must comply with changes to smoke alarm regulations which came into effect on 1 January 2022. Sellers are now obliged to install smoke alarms compliant with the new regulations in dwellings and residential units prior to settlement.
Buyers cannot terminate for the Seller’s breach of this clause, but if smoke alarms are not compliant the Buyer is entitled to an adjustment of .15% on the purchase price, but only if claimed by the Buyer in writing on or before settlement.
Pool Compliance - Sellers are required to hand over a Pool Compliance Certificate at or before the Settlement Date (unless a Notice of No Pool Safety Certificate is given to the Buyer before the Contract is signed). Failure to do so may entitle the Buyer to terminate the Contract.
Deposit by Direct Debit - Deposits can now be paid by direct debit and payment will be deemed to be paid on the day the Buyer makes the electronic payment, with a grace period of up to 2 Business Days after Seller gives notice that payment has not been received. Buyers paying deposits electronically should give the Deposit Holder evidence of such payment.
There are also changes regarding:
Property Notices from authorities
Updates to seller warranties
Services passing through the land which are not protected by an easement
The release of the new editions of the REIQ contract does not impact existing contracts that have not yet settled.
If you would like further information or require advice or assistance, please call our office on 07 5443 4866 or email email@example.com