Residential contracts – what’s new for buyers

 

Australians’ obsession with the property market continues unabated. Earlier this year the Real Estate Institute of Queensland (REIQ) brought in some changes to the way contracts for sale are drawn up.

As a buyer, here’s what’s new for you:

1. Compliant smoke alarms: Smoke alarms must be installed in any domestic dwelling. If the seller has not installed smoke alarms, you can claim an adjustment at settlement that’s equal to 0.15 per cent of the purchase price. On a $750,000 contract, this equates to an adjustment of $1,125! Buyers are also now allowed to enter the property to see whether smoke alarms have been installed. If you buy a property without smoke alarms, you’re obligated to install them after purchase, as soon as possible.
2. Pool compliance: The seller is obliged to provide you with a pool safety certificate. Under the contract, a pool compliance certificate means – a pool safety certificate; a building certificate that may be used instead of the Pool Safety Certificate under the Building Act 1975 (Qld); or an exemption from compliance on the grounds of impracticality under the Building Act 1975 (Qld). If the seller fails to hand over a certificate at settlement, you can terminate the contract.
3. Deposit by direct debit: In a sign of the digital era, more deposits are being paid electronically. Due to the processing time for electronic payments, the day you as the buyer makes the payment is the day the deposit is considered to have been paid (rather than the day the funds clear in the destination account). If you don’t pay the deposit by the due date, the seller can’t immediately terminate the contract of sale. Instead, they can give you notice to complete the payment, and can only terminate the contract if payment has not been made two business days after the notice was issued.
4. Seller warranties: New contracts now stipulate that the seller does not “warrant that the present use is lawful”. So, for example, if the property is being used as a gym, that does not mean that a gym is lawfully allowed on the property. Consequently, it is very important for buyers to consider whether the use of the property is lawful and to verify this, instead of simply ‘taking the seller’s word’ for it.
5. New termination rights: Buyers now have a termination right if there is – an error in the boundaries or area of the property; an encroachment by structures onto or from the property; there are services that pass through the property which do not service the land and are not protected by an encumbrance disclosed to the Buyer in the contract; or if there is a mistake or omission in describing the property of the Seller’s title to it.
6. Extension of settlement date: Anyone, either the buyer or seller, can extend the date of settlement at any time up to 4pm on the initial settlement date. You must then make a new date for settlement, which can’t be later than five business days from the original date. To extend the settlement date, you must give notice in writing. 

At GLG Legal, we aim to take the confusion out of buying and selling. To make an appointment, contact us on (07) 3161 9555 today.