On 7 May 2014 the Property Occupations Bill 2013 (the Bill) was passed by Parliament. The objectives of the Bill are to provide for the repeal and split of the Property Agents and Motor Dealers Act 2000 (PAMDA). The Bill is one of four Bills that will split PAMDA and regulate property related occupations. It aims to achieve an appropriate balance between the need to regulate for the protection of consumers and the need to promote freedom of enterprise in the market place.
It should be noted however, that where a contract has been entered into under PAMDA, the requirements of PAMDA will continue to apply to that contract. That means that if a buyer has a right to terminate a contract under PAMDA, it will continue to have that right.
Some of the new changes can be characterised below:
A New Definition of “Residential Property”
The Bill will strip back the definition of residential property so that it only applies to a contract for the sale of ‘residential property’ with exemptions for contracts formed at or after auctions, because of the exercise of an option or with sophisticated buyers.
The new definition for residential property under the Bill is:
“Residential property is real property that is used, or is intended to be used, for residential purpose but does not include real property that is used primarily for the purposes of industry, commerce or primary production.”
No More Form 30C Warning Statement or Form 14 Information Sheet
The Bill will eliminate the requirements under:
• PAMDA for a Form 30c Warning Statement; and
• The Body Corporate and Community Management Act 1997 (Qld) (BCCM) for a Form 14 Information Sheet for a unit sale.
These forms will no longer need to be attached to the contract and there will no longer be a requirement for a clear statement to be given directing the buyer’s attention to these forms. Instead, the contract will need to include a prescribed statement that:
1. The contract may be subject to a 5 business day cooling off period;
2. A termination penalty of 0.25% of the purchase price applies if the buyer terminates during the cooling off period; and
3. It is recommended the buyer, before signing the contract, obtain an independent property valuation and independent legal advice about the contract and their rights during the coolingoff period.
The prescribed statement must appear only once, immediately above the execution clause for the buyer.
No Termination Trigger
Currently under PAMDA and BCCM, a buyer may terminate a contract if a seller fails to give the clear statement directing the buyer’s attention to the Form 30C Warning Statement and (if a unit sale) the Form 14 Information Sheet.
Under the Bill, the seller or the seller’s agent, depending on who gave the contract to the buyer, will commit an offence for failing to include the prescribed statement, but the seller’s failure will not trigger a right for the buyer to terminate the contract. This essentially means the buyer will no longer be able to terminate a contract based on the slightest technical infringement of PAMDA or BCCM.
Cooling Off Period can be Waived or Shortened by Notice
Currently under PAMDA, the cooling off period may only be waived by the buyer’s lawyer giving a Form 32a Lawyer’s Certification to the seller. This requirement is to be removed as it is considered to be an unnecessary expense and will allow a buyer to waive or shorten the cooling off period by written notice to the seller. The Bill also removes technicalities with a buyer terminating during the cooling-off period. The termination notice will no longer need to specify the section of the legislation under which the buyer is terminating, nor be dated. This therefore means the Bill will remove the requirement for the buyer’s lawyer to give the buyer a Form 32a Lawyers Certification.
Commission
Commission has been deregulated so there is no maximum commission that is fixed for residential property transactions. As the maximum commission constraints which an agent can charged have been removed mean an agent can charge whatever commission they wish, provided of course the seller agrees with it.
Further, the requirement for agents to disclose to a buyer the commission the agent is receiving from the seller will be removed.
Property Auctions
The use of price guides and the disclosure of reserve prices in Queensland property auctions will be prohibited. The Bill imposes requirements and prohibitions on auctioneers and real estate agents in relation to representations about price. The amendments made allows agents to disclose the fact that a reserve price has been set for residential property proposed for auctions, however real estate agents will not be allowed to disclose what the reserve price is. The amendments also provide that a real estate agent must not disclose to a person other than a person acting for the seller an amount the property agent considers is a price likely to result in an acceptable bid for the offered property.
Conclusion.
There are a number of changes under the new Bill which has been designed with a view to cutting red tape and improving the operation of legislation. The Queensland government consulted widely with the industry to create a simpler system and in essence believe the new laws will help business while maintaining appropriate protections for consumers.
