Selling or buying property? The REIQ Contracts have changed!
On 20 January 2022, the REIQ released new residential and commercial land contracts with immediate effect.
The changes accommodate changes to case law and legislation, as well as to address the increasingly common problem of a party being unable to settle due to the actions, or inactions, of their bank.
A summary of the key changes are outlined as follows:
Compliant Smoke Alarms
- Sellers are required to install smoke alarms in any domestic dwelling in accordance with relevant legislation prior to settlement.
- If a seller fails to comply with this requirement, the buyer can claim an adjustment in their favour of an amount equal to 0.15% of the purchase price. The buyer will then be required to install compliant smoke alarms in the property after settlement.
- Buyers have been given a right access the property (with prior notice) to inspect the smoke alarms installed by the seller prior to settlement.
- Sellers must ensure that compliant smoke alarms are installed in their property prior to settlement or risk a reduction to the purchase price!
Payment of Deposit
- A buyer is now deemed to have paid the deposit on the date which they instruct their bank to pay the funds from their account provided they give written evidence of the payment to the deposit holder and do not take any steps to defer the payment being made.
- This amendment addresses the delays which can occur with electronic funds transfer and the risk that a buyer will be in breach of contract if the funds transfer is not completed by the due date for payment of the deposit.
- However, if the deposit is not paid by the due date and the seller gives notice of that to the buyer, the buyer will be in default unless the deposit is received by 5pm on the date which is 2 business days after the seller’s notice is given.
- Buyers are encouraged to provide evidence of payment of the deposit to their solicitor and the deposit holder as soon as possible after the payment has been made.
Pool Compliance Certificate
- A seller is required to hand over a pool compliance certificate for a non-shared pool at settlement. The only exception to this is if a Notice of No Pool Safety Certificate if given to the buyer prior to the contract date.
- If the seller fails to comply with the requirement to provide either a Notice of No Pool Safety Certificate prior to the contract date or a Pool Compliance Certificate on settlement, the buyer will have a right to terminate the contract.
Right to Extend the Settlement Date
- Both parties now have a unilateral right to extend the settlement date at any time up to 4pm on the settlement date. This change presents the most significant change to the REIQ contracts and to conveyancing in general.
- The extension to the settlement date must be for a period of no more than 5 business days after the original scheduled settlement date. However, more than one extension can be obtained. That means a party may unilaterally extend the settlement date on more than one occasion.
- The rationale behind the new provision is to alleviate the difficulties and potential risk to a buyer associated with a financier being unable to settle on the original settlement date.
- Whilst the rationale is appropriate, the drafting of the clause does not limit the unilateral right to extend to circumstances associated with delays with either party’s financier. This means a party could rely on this clause to extend the settlement date for reasons other than delays with their financier.
- This clause may also result in further delays with financiers who do not make reasonable attempts to complete the settlement on the original scheduled settlement date and instead, rely on their customer’s ability to unilaterally extend the settlement date if they are not ready to settle on time.
- This clause presents a risk to buyers who are intending to move on or shortly after the settlement date and who have made arrangements for their move. Those buyers risk having to reschedule their moving arrangements, make plans for temporary accommodation or request early possession of the property from the seller.
- The clause also presents a risk to sellers who are looking to complete the settlement of both a sale and a purchase on the same day.
Services unrelated to the land
- A buyer now has a new right to terminate the contract if infrastructure unrelated to the delivery of services passes through the land and is not protected by a registered easement or statutory authority.
- A seller will now need to disclose the existence of any infrastructure on the land which does not provide services to the land. If such infrastructure exists, it needs to be disclosed to the buyer in the contract.
- Sellers will need to carry out appropriate searches of the land prior to entering into a contract with a buyer so as to ensure the existence of any infrastructure is disclosed in the contract.
If you have any queries relating to the changes to the REIQ contracts or require assistance with a conveyancing matter, please do not hesitate to contact Sarah Stoddart on 0421 798 339 or email@example.com
Sarah Stoddart is a commercial and property lawyer who specialises in the pharmacy and broader healthcare industry. She prides herself on being approachable and helping clients resolve their legal issues in a practical and timely manner.
This article is intended to be for general information only. It does not constitute legal advice nor does it establish a relationship of client and lawyer. Specific circumstances or changes in law may vary the accuracy or applicability of the information published. We recommend seeking specific legal advice particular to your circumstances before taking any action, or refraining from taking any action, on any issue dealt with in this article.