Three Key Changes in the New Residential Contracts

By |2022-06-29T10:01:05+10:007-6-22|

Earlier this year, the latest edition of REIQ’s standard form contracts for the sale and purchase of residential property in Queensland were released.

The changes in the latest editions have been made to take into account new legislation and case law and importantly, to give either party a right to extend settlement by up to 5 business days. The trigger for this particular change seems to be to ensure Buyers are not caught out if their financier is not ready to settle on the settlement date (for whatever reason) given the potential consequence of losing the deposit paid if the Contract is terminated as a result.

The three key changes of the new residential contracts are discussed below:

Right to extend settlement

The Seller or the Buyer can extend settlement (on more than one occasion) by up to a period of 5 business days. A party can exercise this right unilaterally and without any reason or justification.

Practically speaking, this can be a nightmare for Buyers or Sellers especially in circumstances where notice of the extension can be given by the other party at any time up until 4pm on the settlement date.

For example, receiving such a notice could have the following consequences:

  • As a Buyer, cancelling your removalists at the last minute and finding alternative accommodation (unless the Seller grants you early possession of the property, which can sometimes be difficult to obtain); and
  • As a Seller, you might have another transaction reliant on receiving the settlement proceeds by a certain date, and a late extension of the settlement date could be problematic.

Being aware of this right to extend is important and you may wish to include a special condition in the Contract removing this right, especially if settling on a certain date is critical to you.

New Smoke Alarm requirements

From 1 Jan 2022, dwellings or residential units for sale must, by law, have compliant smoke alarms installed. If compliant smoke alarms are not installed by the settlement date, the Buyer will be entitled to an adjustment of 0.15% of the Purchase Price payable. A right for the Buyer to access the Property with notice to inspect smoke alarms has also been included in the new Contracts.

Updated Pool Safety compliance

If there is a “non-shared” pool on the property, the Seller must now obtain a pool safety certificate and hand this over to the Buyer at settlement, unless a “Notice of No Pool Safety Certificate” is given to the Buyer before the Buyer signs the Contract. A failure of the Seller to do this will entitle the Buyer to terminate the Contract.

If you’re thinking of selling or purchasing property, it’s important to be aware of these latest changes to ensure no unwelcomed surprises on the settlement date.

Matthew Russell is a Partner in the Property section and can guide you through the legal process of the conveyance of your property right from the start of the matter through to the successful settlement.

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