REIQ Contract Updates: Key Changes You Need to Know
It is hard to escape news of the house price boom that's occurred in recent times. Despite recent weather events and the Reserve Bank of Australia announcing an interest rate rise, the Director of Economic Research at PropTrack noted that March 2022 saw the market hit with more new properties than any other month (bar one) since October 2014.
With such a high volume of sale contracts being completed, it's more important than ever to heed changes to standard residential contract conditions in Queensland. If you're a buyer or a seller in the hot property market, don't be caught out; we cover the most recent changes that Real Estate Institute of Queensland (REIQ) have made to standard residential contract conditions as of 20 January 2022.
1. Extensions to settlement dates
New REIQ residential contracts from January 2022 now include a short extension of the settlement date, should a party be unable to settle by the original date. This has been perhaps one of the most significant changes introduced. What this means for either the buyer or the seller is that they're able to extend their settlement date by up to 5 business days by providing sufficient notice to the other party.
For the extension to be considered an 'extension notice', it must be in writing and be sent prior to 4:00 pm on the original settlement date. Previously, being unable to settle in time with no grace period allowed has led to the REIQ contract being terminated, so this new clause helps to alleviate the circumstance where property buyers are potentially unfairly affected when delays in settlement are out of their control.
This particular change to new contracts has been affected by introducing a new clause (6.2) and is extremely helpful in combatting the ongoing difficulties faced by property buyers of late.
2. Different Payment for Method of Deposit
A sign of the digital era is that deposits are more frequently being paid electronically. An amendment to clause 2.2 takes this evolution into consideration and clarifies the due dates for electronic payments. Due to the processing time of electronic payments, the clause provides express provision under the circumstances when a buyer chooses to pay their deposit via direct debit. Under these circumstances, the day the buyer makes the payment is the day that the deposit is considered to have been paid (rather than the day the funds clear in the destination account).
Suppose a buyer chooses to pay their deposit via electronic means. In that case, they are required to show evidence or proof of payment (such as the receipt from their online banking or even a screenshot of the payment made online).
The clause also provides a small window of grace; if the buyer doesn't pay the deposit by the due date, the seller can no longer immediately terminate the contract of sale. Instead, the seller is able to give notice to the buyer to complete the payment and can only terminate the contract if payment has still not been made two business days after the notice is issued.
3. New smoke alarm clause
Smoke alarm regulations were updated on 01 January 2022, so amendments have been made within the REIQ contract to respond to the changes. A new smoke alarm clause (clause 7.8) sets out a contractual obligation on the seller to ensure that smoke alarms are installed in compliance with the new regulations.
It's also important to note that settlement is not able to be delayed by the installation, and that the seller is required to install smoke alarms that are compliant by the date of settlement. If the seller fails to do so, then the buyer is entitled to adjust the purchase price on the REIQ Contract by 0.15%. On a $750,000 contract, this equates to an adjustment of $1,125!
In addition to the new clause 7.8, clause 8.2 has also been amended to allow property buyers to enter the property to inspect whether the installation of compliant smoke alarms has been completed.
4. Matters that affect the property
There have been a number of additional changes around matters affecting the property.
The REIQ Contract Date
With COVID's social distancing measures, as well as interstate buyers purchasing property in Queensland, many contracts have moved away from paper and are now electronic contracts. The definition of Contract Date has now been updated to accommodate signing electronic contracts via RealWorks.
Pool Compliance Certificate
If the residential property or residential land includes a non-shared pool, under the amended Pool Compliance Certificate Obligations, the seller is required to provide a pool safety certificate to the buyer. The only exception is if a Notice of No Pool Safety Certificate is provided to the buyer prior to the contract of sale.
New Warranty
The standard REIQ contract contains various 'seller warranties'. Seller warranties are effectively statements that are made about the property by the seller, to the buyer. There has been a new warranty added in the updates, as well as re-numbering the warranties in clause 7.4.
The new clause sets out that the seller needs to warrant they haven't received communication from a competent authority that could lead to a 'show cause' or enforcement notice being issued, nor any notice to do work that's referred to under clause 7.6. The amendments to clause 7.6 also change the responsibility for notices to do work (depending on when it was issued and whether it was disclosed by the seller prior to or after the contract).
The reason these changes have been made is because local governments can liaise with property owners for a considerable period before issuing a formal non-compliance notice. What this means is, once local council becomes aware of the proposed sale of a property (usually instigated when the buyers perform a search), they may issue a formal notice. Under the present clause, the enforcement notice would become the buyer's responsibility; the new clause has been added in an effort to overcome any resultant unfairness for the buyer.
Services Infrastructure
If the buyer uncovers infrastructure unrelated to delivering services such as gas, electricity, water or sewerage that aren't protected by a statutory authority, registered easement or Building Management Statement (BMS) passing through the land, and it's not been disclosed by the seller, then they now have the right to terminate the contract. This is made possible by amendments to clause 7.5 around services infrastructure located on the land.
Conveyancing in Queensland
Selling an investment property or buying a new property is certainly an exciting time, but it does come with the legal paperwork to make it happen. In Queensland, your REIQ contract will become conditional upon the buyer obtaining approval from their financier, so making sure that all parties are across their contractual obligations is critical to a smooth buying process.
The latest edition (17th) of the Houses and Residential Land, as well as Contract for Residential Lots in a Community Title Scheme, are only available to members of the Queensland Law Society.
As well regarded Sunshine Coast solicitors, we are experienced when it comes to property conveyancing in Queensland. Even when you're transferring ownership of a Queensland property, you will require conveyancing; we make the conveyancing experience stress free.
To find out how we make the buying or selling process easy when it comes to legal matters, contact our office today.
This article is general in nature and does not constitute legal advice. If you require legal advice in relation to your personal circumstances, you must formally engage our firm, or another firm to provide legal advice in relation to your matter. Bradley & Bray lawyers takes no responsibility for any use of the information provided in this article.
You might also be interested in
