Buying and Selling Residential Land – Legislative Changes

As of 1 December 2014, the Property Agents and Motor Dealers Act 2000 (‘PAMDA’) is repealed and the Property Occupations Act 2014 (‘POA’) applies to the purchase or sale of residential land in Queensland. This new legislation makes a number of changes to the process of buying and selling land in Queensland.

A new version of the standard REIQ contract is available and must be used for any contracts entered into that come under the POA.

What contracts does the POA apply to?

The POA applies to ‘relevant contracts’which includes the sale of residential land however, does not include the following contracts:

  1. contract formed on a sale by auction;
  2. contract entered into, by no later than 5.00 pm on the second clear business day after the property was passed in at auction, with a registered bidder;
  3. a contract formed because of the exercise of an option granted under an earlier contract, if the parties to the later contract are the same;
  4. a contract if the buyer is, or is a subsidiary of, a publicly listed corporation;
  5. a contract if the buyer isthe state or a statutory body; or
  6. a contract if the buyer is purchasing at least 3 lots at the same time, whether or not in the 1 contract.

 

What is residential property?

The definition of Residential Property has been simplified and reads:
Residential property is real property that is used,or is intended to be used,for residential purposes but does not include real property that is used primarily for the purposes of industry, commerce or primary production.

This definition is similar to that contained in the repealed PAMDA and expressly states that the term does not include real property that is used primarily for the purposes of industry, commerce or primary production.

Removal of the Form 30C Warning Statement The POA removes the requirement for a Form 30C warning statement to be attached, in favour of a clear statement to be given by the seller, or the seller’s agent to the buyer. Under the POA a proposed relevant contract must include, on the same page and immediately above the place in the contract where the buyer signs,the following words (or similar):

The contract may be subject to a 5 business day statutory cooling-off period. A termination penalty of 0.25% of the purchase price applies if the buyer terminates the contract during the statutory cooling-off period. It is recommended the buyer obtain an independent property valuation and independent legal advice about the contract and his or her cooling-off rights, before signing. The buyer will no longer have a right to terminate the contract in the event of the seller’s failure to comply.

Has the cooling off period changed?

The length of the cooling-off period remains at 5 business days starting on the day the buyer receives a copy of the relevant contract signed by both parties.

The process of waiving or shortening the cooling off period has been simplified and the Form 32a Lawyer’s certificate has been removed. The POA now only requires the person who proposes to enter into the contract to provide written notice to the seller to waive the cooling-off period.The POA provides that a buyer may also shorten the cooling-off period by providing written notice to the seller.

There is no prescribed form for the notice and there is no requirement for the buyer to obtain independent legal advice before waiving or shortening the cooling off period.

How can a contract be terminated under the POA?

A buyer that has not waived the cooling-off period may terminate at any time during the cooling-off period by providing a signed notice of termination to the seller. There is no longer any requirement to state in the termination notice the section that is being relied upon nor is there a requirement that the notice be dated.

The seller may deduct from any deposit paid under the contract an amount not greater than the termination penalty, namely an amount equal to 0.25% of the purchase price. The seller is then required to refund the balance of any deposit paid under the contract within 14 days after the contract is terminated.

Changes to Agents Disclosure Under the POA, a Form 27c Disclosure statement from a real estate agent is no longer required.

Following on from last month’s article relating to amendments to the Land Sales Act 1984 (Qld) for land not within a Body Corporate, we would like to draw to our readers’ attention the recent amendments also made to the Body Corporate and Community Management Act 1997 (Qld) (“the BCCM Act”) for proposed lots in Community Title Schemes, or Body Corporates as they are more commonly known.

A brief explanation on some of the changes affecting proposed Body Corporate lots from 1 December 2014 are as follows:

  • Disclosure Statement and Plan will change slightly so that the Disclosure Statement is now required to state the Sunset Date of the Contract. For standard format lots in a Body Corporate (i.e. some smaller residential subdivisions or residential estates) the disclosure requirements will be greater in that a Seller will have to give a Buyer both a Disclosure Statement and a Disclosure Plan. In addition to this, if at registration of the plan the Seller intends that a building will be constructed on the lot, then the disclosure plan must show the location of the building and other features of the building such as area, number of levels and any other feature to be constructed.
  • Where there is a change to the Disclosure Plan the amendments to the BCCM Act will simplify the process and hopefully avoid delays in settlement. Sellers will now have the ability to provide a Buyer with a statement regarding changes to the Disclosure Plan or the Disclosure Statement at any time whilst the Contract is on foot no later than 21 days before the Settlement Date. If a change relates to the Disclosure Plan then the statement regarding the change will need to be endorsed by a Surveyor. The Buyer then has the right to terminate the Contract if they are materially prejudiced by the change outlined in the further statement within the 21 day period prior to settlement.
  • Sunset Dates for contracts for proposed Body Corporate lots will be extended to up to five and a half (5 1/2) years from the Contract Date. It is no longer necessary for Sellers to apply to the Government to extend the Sunset Date as was previously the case.The requirement to give a Buyer prescribed notice that the Sunset Date is more than three and a half (3 1/2) years has also been abolished.If the Sunset Date is not specified in the Contract then it will be deemed to be three and a half (3 1/2) years from the Contract Date. If you are considering buying a unit off the plan in the foreseeable future or are interested in more information regarding the recent amendments to the BCCM Act then please do not hesitate to contact one of our firm who will assist you through the conveyancing process.
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