For real estate agents selling property in Queensland, absorbing the changes to the latest editions of the Contract for Houses and Residential Land (17th ed.) and Contract for Residential Lots in a Community Title Scheme (13th ed.) is an important part of staying up-to-date in this dynamic industry.
Digital platforms such as Offer to Own make connecting buyers with sellers even easier, but when it comes to being aware of changes to sales contracts and the impact those changes have on your clients, familiarising yourself with amendments helps you showcase your professional knowledge and expertise in the best possible way.
There are six key changes, as well as other amendments – with updated legislation created in collaboration between the Queensland Law Society (QLS) and the Real Estate Institute of Queensland (REIQ) – that will appear on the new editions of the contracts, released on 20 January 2022.
In Queensland, the REIQ/QLS property contracts are the most common form of sale contracts used. With that in mind, understanding how the newest round of amendments will impact you and the service you give your clients, is critical.
The most significant changes around new clauses or clause amendments are:
6.2 – Right to extend Settlement Date
A new clause that allows either party to give a notice extending the date for settlement up to five business days after the Scheduled Settlement Date.
7.8 – Compliant Smoke Alarms
A new clause that will impose a contractual obligation on the seller to install smoke alarms in compliance with the new requirements.
2.2 (sub-section 3) – Deposit by Direct Debit
A new clause outlining express provision regarding payment of a deposit by direct debit – and a grace period that reflects the impact of delays in the deposit of funds via direct debit.
5.3 (sub-section 1) – Pool Compliance Certificate
Clause 4.2 (pool safety special condition) has been deleted and pool-related provisions are simplified. A seller is required to provide a Pool Compliance Certificate for a non-shared pool at settlement.
Contract date & RBA closure – the new definition of Contract Date in clause 1 is amended to accommodate signing by contracts in Realworks using DocuSign by real estate agents.
New Cyber Warning – appears in the Reference Schedule, warning the buyer to confirm the details of the deposit holder’s trust account before paying any money electronically to third party.
The Rise of Digital Property Transactions
Interestingly, many of the changes made reflect the growing trend towards digital property settlements and digital conveyancing – an industry change that will continue to see a reduction in traditional paperwork.
The most significant change for real estate agents navigating their clients towards successful property settlements is the unilateral right for both buyers and sellers to extend the property settlement date.
This change is a direct response to the recent climate, with many lenders overwhelmed and unable to meet settlement date expectations on time.
The Importance of Trusted Referral Partners
What is critical to remember here is that a written request for an extension must be drafted by a lawyer, to ensure complete compliance. The good news for you as an agent is that, by directing your clients to seek professional legal assistance, it relieves any added pressure on real estate agents who might be concerned that the contract changes will mean extra workload at what is always a busy time. As with any legally binding contract, strict compliance is key – and that need serves as a powerful reminder to support clients in making connections with experienced conveyancing specialists.
It’s important to note that, when working with clients who may need to take up the settlement date extension opportunity, that the written request must be made by 4pm on the previously agreed Scheduled Settlement Date.
Either party has the right to give notice advising an extension is needed – but the new settlement date must be no later than five Business Days after Scheduled Settlement Date on the original Contract of Sale. Under this new clause, a party can give more than one Extension Notice, provided the new date chosen is still within the five (5) business days from the original Scheduled Settlement Date.
The Pros and Cons of Change
Although the REIQ has been upfront about admitting that any significant contract changes are a delicate balancing act between pleasing one party and causing potential frustration to another, the amendment relating to extension rights has been designed to reduce the financial stress that has previously been caused by Queensland’s stringent adherence to settlement date cut-offs – a change that brings the state more in line with other Australian jurisdictions.
Under previous contract legislation in Queensland, settlement delays caused by financial institution processes saw sad stories of incoming buyers, whose finance was not finalised in time, lose significant deposit funds when sellers exercised their right to terminate sale contracts.
Of course, no change is perfect and, being a unilateral extension right, it means that both parties are able to exercise that right without having to seek mutual agreement of the other party. As an agent, that has the potential to make you feel like the meat in the sandwich between the needs of the seller and the buyer and the impact that one party’s decision may have on the other.
For real estate clients keen to manage a contemporaneous settlement, the impact of extension rights is more complex. For example, if a seller schedules settlement day on the same day they intend to settle the purchase of another property, the impact of one party utilising their right to extend the Scheduled Settlement Date could create issues that will have a flow-on effect to many different components of settlement day.
Steps to Smooth Settlements
While everyone wants to see settlements happen smoothly and on time, the reality is that lenders can sometimes cause delays that are beyond the control of both sellers and buyers.
With extension requests having the potential to wreak havoc on bookings with cleaners, removalists and other trade professionals who form such a key part of property sales and purchases, savvy real estate agents will start educating incoming clients to consider longer settlement periods that offer more flexibility for last-minute delays – something that will create long-term change in the Queensland real estate sector.
Seller versus Buyer – Rights and Responsibilities
When it comes to the clause amendment around smoke alarms, agents keen to minimise financial risk for sellers can become powerful advocates for thorough building inspection reports.
Under the change to clause 7.8 (1), the seller’s failure to comply with the provision of working smoke alarms means that the Buyer is entitled to an adjustment on settlement that is equal to 0.15% of the Purchase Price – but only if claimed by the Buyer in writing on or before settlement.
While the math connected to a $500,000 purchase price adds up to a $750 adjustment in favour of the buyer, sellers of high-end real estate could be extremely disgruntled to discover the cost of a mistake around this clause.
It’s just another reason that finding positive, efficient and reliable ways to streamline every possible aspect of the real estate transaction process gives thoughtful agents more time to focus on the delivery of exceptional customer care to keep referrals from satisfied clients flowing for future success.
Ensuring you don’t let ongoing legislation changes have a negative impact on your relationship with valued clients, so that you can focus on doing what you do best – connecting real estate buyers and sellers interested in Queensland properties – is another great reason to connect with conveyancing and property law specialists you can trust. When you have the latest, accurate information about property contracts at your fingertips, it help you give your clients the best possible property settlement experience.
To find out more about how Offer to Own can help take the headache out of contract sale amendments and link your clients up with an experienced team of conveyancing specialists, get in touch with our team today.
For more information about the full extent of the clause addition and amendments in REIQ/QLS contracts from 20 January 2022, see below:
- Clause 2.6 – adjustment of outgoings
- Clause 5.1 – place of settlement
- Clause 6.3 – new delay event
- Clause 7.7 – clarification of the buyer’s right to terminate if service to the land pass through other land and are not protected by a registered easement, BMS, statutory authority, or in the case of a lot in a CTS , the statutory easements under the Land Title Act 1994.
- Clause 8.4 - added new requirement for the seller to provide the local government rate account number for the land upon request.
- Clause 9.1 - redrafted for clarity but note: no intention to change the rights of the parties.
- Clause 10.5 - amended to include public holiday days where the Reserve Bank of Australia is closed in both Sydney and Melbourne. Only applies to the settlement date for electronic settlement.
- New clause 10.9 (sub-section 6) - added to assist all involved parties with the counting of time provisions in the contract.
- Clause 11.4 - amended to provide for a roll-over of settlement date where a computer system required for settlement is either ‘inoperative or unavailable’. This change provides a broader operation of the clause to include where a computer system may be working but not available for settlement on that day.
This article is provided for general information purposes only. Its content is current at the date of publication. It is not legal advice and is not tailored to meet your individual needs. You should obtain specialist advice based on your specific circumstances before taking any action concerning the matters discussed in this article.