Changes to REIQ Contracts Explained
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From 20 January 2022, a number of changes to standard residential property contracts came into effect. The amendments were triggered by the property boom during the pandemic and put in place by the Real Estate Institute of Queensland in conjunction with the Law Society.
The amendments extend to matters including:
- contract extensions;
- pool certificates;
- smoke alarms; and
- seller warranties.
The amendments serve to increase sellers’ obligations from a compliance perspective, which can be of benefit to buyers and also include new provisions to protect both buyers and sellers from being punished for delays out of their control.
An overview of some of the changes appears below.
Buyers and sellers alike now have the right to require that the Settlement Date be extended by up to five business days by giving notice to the other party to the Contract at any time up to 4pm on the original settlement date.
The update will provide both parties with the ability to extend the Settlement Date without the other party’s consent, which can be of real benefit to a party that finds itself unexpectedly unable to settle (for example, in cases where it has been delayed due to the bank or lender’s inaction). Before this amendment, the only way to extend the Settlement Date was with the agreement of the other party to the Contract (which did not have to be provided).
A seller is now required to provide the relevant pool compliance certificate for a private pool at settlement. In cases where a Notice of No Pool Safety Certificate is given to the buyer before contracts are exchanged, this obligation will not apply.
The new clause relating to smoke alarms introduces an obligation for sellers to install compliant smoke alarms by the Settlement Date. If a seller fails to comply with this obligation, the buyer is entitled to claim an adjustment in its favour at settlement of an amount equal to 0.15% of the Purchase Price. Under the new standard term, this is the buyer’s only right under the Contract for the seller’s failure to install compliant smoke alarms and the adjustment must be claimed by the buyer in writing before settlement. Accordingly, it is important that buyers make enquiries about whether compliant smoke alarms have been installed and ensure that they exercise their right to an adjustment, where appropriate before the right is lost.
The existing seller warranties have been renumbered and a new warranty has been added. Sellers now warrant that they have not, as at the date the Contract is signed, received any communication from a competent authority that may lead to the issue of certain notices, including a show cause or enforcement notice. Where the seller’s warranty is breached, and the buyer becomes aware of that breach prior to settlement, the buyer may terminate the Contract.
What are the implications of a contract for sale not being prepared correctly?
It is imperative that an experienced property lawyer or conveyancer is engaged by both buyers and sellers to ensure both parties receive advice as to the terms of the contract that is specific to their circumstances and so the transaction runs seamlessly. In case any misunderstandings or disputes arise, suitably qualified property lawyers and conveyancers can get the transaction back on track with minimal disruption with the aim of achieving the best outcome for the parties.
If you are selling or buying a property and require the services of an experienced conveyancer to carry out the transaction from end to end, we can assist.
The above is only a general overview of some of the recent changes to the standard terms of the REIQ Contract. It does not provide an exhaustive explanation of the changes and does not comment upon the parties rights and obligations under the REIQ Contract more generally. If you intend to enter into a Contract for the sale or purchase of residential property in Queensland, you should first obtain legal advice that is specific to your circumstances.