After being in the spotlight, for all the wrong reasons, the REIQ quietly released new editions of the contract for Houses and Residential Land (17th edition) and Residential Lots in a Community Titles Scheme (13th edition) on 20 January 2022.
The changes effect both contracts which are negotiated, as well as auction contracts.
While there is now some familiarity with the changes, as we take a closer look at the practical outcomes of these amendments, it seems to increasingly be the consensus that the bright ideas behind some these changes may not be as glittering in practice.
A summary of the changes is as follows:
Settlement extension
The new terms give the ability of either the Seller or the Buyer to obtain an extension of up to 5 Business Days to settlement where a party is unable to settle for any reason. The reason for extending does not need to be disclosed to any other party.
While this is a welcome change for people who are burdened by the inability of their lender to settle on time through no fault of their own, in practice, there will likely be confronting scenarios for those with loaded up moving trucks, trying to move from one place to the next on the day they assumed would be the settlement date. All client’s should be informed that the settlement date is now fluid, and can be changed up until the very last minute on the day.
Smoke alarms
The Seller is now required to ensure they have compliant smoke alarms installed in their property which meet the criteria under relevant legislation. If the Seller has not installed them by Settlement, the Buyer can deduct 0.15% of the purchase price payable at settlement. Buyers are afforded an additional opportunity to access the property specifically to inspect the smoke alarms. A Buyer should take a qualified electrician or smoke alarm expert with them to this inspection, to obtain advice on whether they are compliant.
The Buyer should be aware if they buy a property with non-compliant smoke alarms, they will be responsible for installing the required alarms under the legislation immediately following settlement and will be subject to penalties if they fail to do so.
Payment of deposit by EFT
Buyer’s paying their deposit by electronic transfer are now afforded a grace period to allow time for the funds to reach the Deposit Holder’s Trust Account. They are only afforded this if they make the transfer on or before the due date for the Deposit under the Contract and provide evidence of the transfer to the Deposit Holder. If the Buyer does not provide the Deposit Holder with evidence of the transfer, the Seller may still have the right to cancel if it has not been received by the due date.
Pool safety certificate
A Seller is now required to provide a Pool Safety Certificate prior to Settlement. If they don’t, the Buyer will be in a position to terminate. The only exception to this obligation is if a Notice of No Pool Safety Certificate is given to a Buyer before they sign the Contract. If the property is in a Community Title Scheme, the Seller will need to contact the Body Corporate to obtain a copy.
To avoid any complications, a Seller should consider the timeframes and costs in making a pool compliant prior to settlement. It should also be noted that small pools and spas can require compliance certificates.
Disclosure of work
The Seller must disclose any pending or existing work to be done on a property, whether or not a formal notice has been issued by the Council as well as any service infrastructure on a property, even if it is not protected by a registered easement, Building Management Statement.
Contract date
The definition of Contract Date has been amended to accommodate signing of contracts electronically. If the Contract Date has not been inserted, then the date is set as the date on which the last party signed.
Our Property Team is ready to assist if you have any questions about the changes to the REIQ contracts. Please contact us by telephoning our office on (07) 3220 2929 or emailing us at contact@plastiraslawyers.com.
