Are you buying or selling a residential property? The REIQ standard residential property contracts have recently been updated. The update includes amendments to contract terms regarding settlement date extensions, smoke alarms, pool safety certificates, deposits, warranties and disclosure requirements.
When do these amendments come into effect?
A common misconception is that the amendments apply to any sale made from 20 January 2022.
The new editions of the contract were released on 20 January 2022; however, contractual rights remain determined by the specific contact that the parties entered. The REIQ contract is the most common form of property sale contact in Queensland; however, you may have entered into an older version of the REIQ contract or a different form of contact altogether. So, the new amendments may not apply to your specific contract.
What are the changes?
Some of the keys changes are:
Extension of Settlement Date
My favourite is that amendment regarding extending the settlement date.
Under the previous edition of the REIQ contracts, both parties were required to settle by 4 pm on the settlement date. In turn, if you or your bank was running late and could not settle by 4 pm, the other party might gain rights against you, including the right to terminate the contract, claim your deposit and sue you. You may recall news where this strict deadline was devastating. In 2021, Mark Trau and Maddie Goyer reportedly had their contract terminated and lost their $75,000 deposit due to their bank not being ready to settle until one day after the settlement date. An even more extreme story was Dr McKinnon’s, who reportedly had her contract terminated and lost a $29,000.00 deposit because her bank was delayed to 4:13 pm; thirteen minutes after the settlement deadline.
The REIQ amendments address this issue (whether or not they do so sufficiently is up for debate). They grant both parties a right to give notice extending the settlement date by up to five days from the agreed settlement date. More than one extension notice may be given, but notice cannot extend settlement to any later than five business days after the agreed settlement date.
The amendments require a Seller to ensure smoke alarms that comply with current statutory obligations are installed in a dwelling. Changes to these obligations came into effect on 1 January 2022, so if you are selling a residential property, you should ensure that you comply with your obligations regarding smoke alarms. You can refer to our blog, “New Year New Rule” for further information regarding smoke alarm obligations. Under the amendments, if compliant smoke alarms are not installed, a Buyer is entitled to an adjustment on the price payable at settlement.
Buyers now have three days for deposit funds transferred electronically to clear into the deposit holder’s trust account, as long as they provide evidence in accordance with the contract.
A Seller must provide a current pool safety certificate at settlement or the Buyer will have a termination right. The only exception is where a Notice of No Pool Safety Certificate is given to the Buyer prior to entry into the contract.
The above outlines some of the key amendments. There are additional changes that may impact on you, including regarding warranties and disclosure requirements.