6 Key Changes to the REIQ Residential Contracts
On 20 January 2022, the Real Estate Institute of Queensland (REIQ) released new versions of the Contract for Houses and Residential Land (17th edition) and the Contract for Residential Lots in a Community Titles Scheme (13th edition).
The latest editions contain many amendments, but Enterprise Legal considers the following six changes to be the most significant:
Both Contracts now allow for a Seller to provide a No Pool Compliance Certificate to the Buyer prior to the Contract being signed and in doing so, there is no other requirement from the Seller in relation to the pool on the land. The Buyer will no longer have a termination right if the pool is not compliant at Settlement.
If however, the Seller does not disclose that there is not a Pool Compliance Certificate, prior to entering into the Contract, then the Seller will be required to obtain one prior to Settlement, at the Seller’s cost. If they fail to do so, the Buyer will have a right to terminate.
From 1 January 2022, dwellings and residential units offered for sale must have smoke alarms installed that comply with the current requirements – these requirements have been getting ‘phased in’ for a number of years now. The new versions of the Contracts specify that should a Seller fail to comply with these requirements prior to Settlement, the Buyer will be entitled to a deduction at Settlement equal to 0.15% of the Purchase Price. Sellers and real estate agents should be aware of this and consider whether it is more appropriate to include a Special Condition fixing this deduction at an amount that has bearing on the actual cost of making the residence compliant.
New Seller Warranty
The new contract editions require Sellers to warrant, as at the Contract Date, they have not received any communication from an authority that may lead to the issue of a show cause notice, enforcement notice or notice to do work. This requirement is a lot broader than previous, which only required a Seller to make a disclosure if an actual notice had been issued. In reality, authorities such as Councils and service providers usually correspond with owners prior to issuing formal notices and this new requirement put the onus on Sellers to disclose any such correspondence.
New Termination Rights
Buyers now have a termination right is there is infrastructure that is unrelated to the delivery of services to the property that passes through the property and such service is not protected by a registered easement, BMS or statutory authority.
Buyers will also have a termination right if any service to the property passes through another property and such service is not protected by a registered easement, BMS or statutory authority.
This means that it is very important for Sellers to complete a ‘Dial Before You Dig’ or similar search prior to entering into the Contract, so that they are aware of the location of all services which may need to be disclosed.
This new concept allows either party to unilaterally extend Settlement by up to 5 Business Days after the Scheduled Settlement Date specified in the Contract.
This mechanism only applies to Settlement and does not apply to other conditions like the Finance or Building and Pest Condition.
Default Place for Settlement
The standard condition has been amended so that is a Seller does not advise the specific location for Settlement (e.g the specific law firm) at least 2 Business Days before the Settlement Date, Settlement will be required to take place at the Titles Office closest to where the land is located. Again, given the erroneous results this condition could result in, we recommend including a Special Condition to amend it.
There has been some significant changes made in the latest REIQ Contract updates for residential dwellings and units and it is important that parties understand what these mean and include appropriate Special Conditions to amend the Special Condition if required.
Firm Director, Peta Gray and Lead Conveyancer, Adrianna Williamson recently presented a Webinar regarding these changes and recommendations for dealing with those changes.
If you would like to receive a copy of the Webinar recording, or have any further questions about the changes and what that could mean for you, please contact our conveyancing team
Our team has also made a range of Special Conditions, including the ones referred to in this article, available for your use via the links below: