The Queensland Law Society (QLS) has confirmed that new editions of the Real Estate Institute of Queensland (REIQ) Contract for Houses and Residential Land (17^th edition) and REIQ Contract for Residential Lots in a Community Title Scheme (13^th edition) will be released by REIQ and QLS on Thursday, 20 January 2022.

These new contracts contain a number of changes to the standard terms as a result of recent case law and new and updated legislation.  These changes are discussed briefly below.

The most significant change arises from recent public discussion relating to circumstances where a buyer’s financier causes delays to settlement.  Arguably, where these circumstances arise, and they are beyond the control of the buyer, the right of the seller to terminate results in an unfair outcome for the buyer.

QLS and REIQ have attempted to deal with this in the new contracts by inserting a new right for either party to extend the settlement date on any number of occasions provided the total extension is no more than 5 business days from the original scheduled settlement date.

Notably, there is no specific requirement in the new condition requiring the party wishing to exercise the right of extension to demonstrate any impact upon their ability to settle.  The only requirement imposed is for the relevant party to provide notice to the other nominating the new settlement date before 4pm on the scheduled settlement date.  This is a vast departure from the strict “time of the essence” approach adopted in the past.

Whilst QLS and REIQ have tried to eliminate contention over the exercise of the right by keeping it simple, all parties need to be aware that this right can be exercised by any party right up until the scheduled settlement date.  The consequences of this range from inconvenience factors, which could still be costly, such as having to reschedule removalists or arrange short term accommodation, to more significant consequences where there are other contracts on foot which have conditions or settlement subject to the original contract settling on the original scheduled settlement date.

Other changes of note in the new contracts include:

• a warranty by the seller that they have not received communication from an authority that may lead to the issue of a formal non-compliance notice or work order.  If the seller is in breach of this warranty, the buyer will be entitled to terminate the contract avoiding any liability under a non-compliance notice or work order;

• additional amendments to clause 7.6, changing the responsibility for notices to do work depending on when the notice is issued (either prior to or after the contract is entered into), when compliance with the notice is required (either before or after settlement) and whether the notice is disclosed by the seller to the buyer prior to the contract being entered into;

• a requirement for sellers to install smoke alarms in compliance with the new smoke alarm laws by settlement. Where the seller fails to do so, the buyer will be entitled to claim an adjustment at settlement in its favour for an amount equal to 0.15% of the purchase price;

• provision for payment of the deposit to be made by direct debit, and a grace period to address delays in the payment of the deposit when paying by electronic means;

• a requirement for the seller to provide a pool compliance certificate for a non-shared pool on the land at settlement. It is expected that this obligation will now form part of the Essential Terms of the Contract, which would entitle the buyer to terminate if not provided at settlement. The only exception to this obligation is if a notice of no pool safety certificate is given to the buyer prior to the contract being entered into;

• a new right for buyers to terminate if infrastructure unrelated to delivery of services (gas, electricity, water or sewerage) to the land pass through the land and are not protected by a registered easement, building management statement or statutory authority that has been disclosed to the buyer; and

• amendment to the definition of the contract date by providing that, where there is no contract date inserted in the reference schedule, it is to be the date when the last party signed the contract.

In light of the above changes, it would be prudent for all buyers and sellers to review their current circumstances and obtain up to date legal advice to ensure their rights and interests are properly protected in respect of any existing contracts, or future contracts they intend to enter into.

Arena Law is happy to assist with any enquiries you may have in respect of the above. Feel free to call us on (07) 3999 7102 or get in contact with us through our website at https://arenalaw.com.au/.