Conveyancing Fast Facts
21 June 2011 ALERT: Transfer duty rates and $10,000 Building Boost
The Queensland Government have announced that from 1 August 2011, transfer duty rates will be adjusted. The most significant change is that there will no longer be a Home Concession available to Buyers purchasing property as their principal place of residence. The transfer duty reforms will be complemented by the introduction of a new six month id="mce_marker"0,000 Queensland Building Boost Grant and the continuation of the $7,000 First Home Owners Grant.
Below is an overview of the changes made to the Concessions & Grants:
Queensland building boost grant
The $10,000 Queensland building boost grant (QBBG) is available to any person or corporation buying or building a new home to live in or to rent out for investment purposes. The QBBG will be available for homes less than $600,000 from 1 August 2011 to 31 January 2012.
Transfer duty home concession
The home concession for transfer duty will cease on 31 July 2011. The concession is currently available to people who are not first home buyers but purchase a home to live in as their principal place of residence,.
First home and first home vacant land transfer duty concession
The first home transfer duty concession and first home vacant land concession continue to apply. However, the concession rates will be revised in light of the removal of the home concession. In particular, the concession will reduce for values from $500,000 to $600,000 against duty at the standard rate. These changes commence from 1 August 2011.
Regional first home owner grant
The standard $7,000 first home owner grant will continue to apply. However, the regional first home owner grant will cease on 30 June 2011. This grant currently provides an additional $4,000 for the purchase of a new home in regional Queensland by a first home buyer.
Calculation of transfer duty is complex and varies depending on your circumstances, please contact us if you would like to get an accurate figure on the transfer duty you may have to pay or to discuss if you are eligible for the Boost Grant or First Home Owners Grant.
7 June 2011 - Default Interest
Q. Is a Seller limited to claiming interest at the “Default Interest Rate” when they are asked to extend for example the settlement date?
A. No. A Seller may agree to extend or not agree to extend on whatever terms they wish and then its a matter for the Buyer to elect whether to proceed with the request for the extension or not. The “Default Interest Rate” referred to in the Item Schedule of the Contract relates to late payments of money as referred to in Clause 9.6 of the Conditions of the Contract. That is, if a payment of money due under the Contract is not paid when due the Buyer must pay interest at settlement calculated at the Default Rate on a daily basis.
The Default Rate of interest may be one way the parties reach agreement on how much the Buyer pays the Seller to compensate them for any loss as a result of extending for example the settlement date but the Seller is not limited to claiming compensation at that rate.
16 May 2011 Valuations
Q. When does Stamp Office require a valuation report for a residential property transaction?
A. In most cases stamp duty is simply paid on the purchase price shown in a Contract for a residential property transaction. In some cases, for example, where the transfer is by way of a gift, the Stamps Office will not just accept the purchase price and they will require a valuation to be submitted.
Basically, a valuation will be required where:
- Both the Seller and Buyer are members of the same family
- Where the Seller and Buyer are corporations and are associated or related
- In transactions where there is no consideration
- Where the consideration cannot be ascertained.
For residential purposes, the Stamps Office generally accepts evidence of market value submitted by either a Registered Valuer or a Real Estate Agent who is competent to assess the value of the property and who is able to support their opinion by evidence of 3 comparable sales and who is independent of the transaction.
The valuation report must:
- Clearly identify the property being valued by giving correct real property description and street address;
- Give a short description of improvements on the property, if any;
- List at least 3 recent comparable sales. If it is not possible to give at least 3 recent comparable sales because the residential property is located in an extremely remote area where sales are highyl infrequent, the Stamps Office will consider the evidence of market value submitted and determine whether further evidence is required.
The stamps office will, in most circumstances, accept evidence of value dated up to 3 months prior to the date the parties signed the transfer of the residential property.
10 May 2011 Multiple Offers to Buy
Q. Is a Seller entitled to accept any offer they choose out of a number of offers to buy a property or are they obliged to accept offers only in the order in which they are made?
A. The Seller in normal circumstances would be entitled to accept whichever offer they considered the best. Unless there has been a promise by the Seller or Sellers Agent that the Seller will sign a particular Contract then the Seller should be free to choose whichever offer they prefer.
TIP: The Seller or Seller’s agent should never indicate to a Buyer that the Buyers offer to purchase a property will or may be accepted. The Buyer should merely be advised to submit an offer and that the Seller will consider it and if the Seller considers it acceptable the Seller will decide whether or not to sign the Contract.
11 April 2011 Cooling Off Period
Q1.How does the Cooling Off Period apply to Contracts?
A. A cooling off period applies to all Contracts for the sale of residential property in Queensland, other than:
- A Contract formed on a “sale by auction" or;
- Where the Buyer has obtained a Lawyers Certificate waiving the Cooling Off Period.
Q2. How long is the Cooling Off Period?
A. The cooling off period is 5 business days commencing on the date the Buyer becomes bound by the Contract or if that is not a business day, the first business day after that day. The Buyer becomes bound by the Contract when the Buyer receives the Contract signed by both the Buyer and Seller.
Q3. How do you terminate a Contract in the cooling off period?
A. A Buyer may terminate the Contract at any time during the Cooling Off Period by giving a signed and dated notice to the Seller to that effect.
Q4. What happens to any deposit?
A. The Seller must refund the deposit after the Contract is terminated however a termination penalty can be deducted by the Seller from the deposit. The penalty is 0.25% of the Contract price.
Q5. Can the Cooling Off Period be altered?
A. The Cooling Off Period can be altered by the Buyer and Seller themselves. To shorten or waive the Cooling Off period a Buyer must obtain a Lawyers Certificate (Form 32a) from an independent lawyer.
4 April 2011 Contract Date
Q.What date should be inserted as the Contract Date in the item schedule of the Contract?
A. We recommend that the Contract date should be inserted as the date the Seller signs the Contract. You should note however that the Cooling Off Period in this case will not be 5 business days from the Contract Date but will be 5 business days from the date the Buyer receives the Contract signed by both parties.
Using the date the Seller signs the Contract as the date of the Contract could possibly lead to an argument that the Contract was not in fact formed on that date but rather on the date when the seller communicated acceptance of their offer to the Buyer. Nevertheless, for practical purposes we believe it is best for the Seller to sign and date the Contract upon signing. If any party does raise an issue about the date of the Contract the parties may need to decide amongst themselves what in fact the Contract date should be.
28 March 2011 - Home Insurance
Q.Once a Contract is signed by all parties is the property at the Buyers or Selers risk through to the settlement date?
A. The property is at the Buyers risk from 5pm on the first business day after the Contract date. This gives the Buyer sufficient time to arrange insurance over the property. The property remains at the Sellers risk until that time.
TIP: We recommend the Seller retains its insurance cover over the property through to settlement as a means of trying to avoid disputes should the Seller be responsible for any damage to the property at any time prior to settlement or in the case that the Buyer in fact fails to take out any property cover.
21 March 2011 - Essential Elements of a Contract
Q.What are the essential elements of a Contract for the sale of land?
A. Generally, the position is as set out below. This is a complex area and the summary below is only a brief overview of the position. A more detailed consideration may be needed in individual cases.
1. Generally, a Contract for the sale and purchase of land will exist when the parties have reached an agreement on the terms of the Contract. Usually this is by a process of offer and acceptance of the terms. Where a standard form of written Contract is signed it is apparent from the document that there has been an offer and acceptance and agreement is reached on its terms.
2. There needs to be “consideration” e.g the purchase price specified to be paid in exchange for the purchase of the property.
3. The terms of the Contract need to be certain e.g we suggest that you need to have at least the following elements:
i. the names of the parties including who is the Seller and who is the Buyer;
ii. the consideration e.g the purchase price in exchange for the delivery of the land;
iii. the subject matter of the Contract e.g an accurate description of the property to be sold so that the property can be identified;
iv. if time is of the essence of the Contract, the date for completion must be stated;
v. any other essential terms of the Contract need to be inserted, such as whether the property is subject to an encumbrance.
4. the parties must have intended to be legally bound by the agreement.
5. Because the Contract is for the sale of land, the Contract or a memorandum of the Contract (containing the essential terms if the Contract) must be in writing.
6. the Contract must be signed by all parties or their authorised agents.
7. the parties must have “capacity” to enter into a Contract. Certain classes of people have limited capacities to sign a Contract such as minors and protected persons e.g mentally disables people or bankrupts.
NOTE: a Contract may be void for voidable for the following reasons:
- Misleading or deceptive conduct
- Undue influence
- Unconscionable conduct
- Unreasonable restraint of trade
2 March 2011 - Foreign Investment
Q.Which non-Australian purchasers do not need foreign investment approval to purchase residential real estate?
A. You are exempt if:
- You are an Australian Citizen living abroad;
- Your spouse is an Australian Citizen (not a permanent resident) and you are purchasing residential real estate in both names as joint tenants (not tenants in common);
- You are a New Zealand citizen and you are purchasing residential property;
- You hold a permanent resident visa and you are purchasing residential property;
- You are purchasing a new dwelling from a developer, where the developer has pre-approval to sell those dwellings to foreign persons;
- You are acquiring an interest in a time share scheme which does not permit you (and any of your associates) more than 4 weeks entitlement per year;
- You are purchasing certain residential real estate in an Integrated Tourism Resort (ITR);
- You are acquiring an interest in developed commercial property valued below $50 million generally; $5 million for heritage listed properties; or $1005 million for US Investors;
- You are acquiring an interest in developed commercial property where the property is to be used immediately and in its present state for industrial or non residential commercial purposes. The acquisition must be wholly incidental to the purchasers proposed or existing business activities;
- You are acquiring an interest by will or by operation of law (such as, a court order regarding the division of property in a divorce settlement, but not if both parties simply agree to transfer property without a courts intervention); or
- You are purchasing property from the Government (Commonwealth, State or Territory, or local)
Foreign persons should determine whether their proposed acquisition is exempt and if in doubt, seek legal advice.
21 February 2011 - Witnessing of Contract
Q.Does a Contract need to be witnessed?
A. No. The only purpose for a signature to a Contract being witnessed is that if there is a dispute as to whether or not a person has signed the Contract then the witness can provide appropriate evidence.
TIP: The Standard REIQ Contract requires each page of the Contract to be initialled and the Contract to be signed and witnessed and this is good practice to confirm what has been included in the Contract that the parties have signed. Also, any alterations to the Contract should be initialled by all parties and preferably by the witness. It is not essential however that the witness initial the amendment but is preferable. Any witness should be over the age of 18. The witness does not need any special qualifications.
15 February 2011 Obligation of Buyer to Tender Balance Purchase Monies at Settlement
Q.If the Seller is in breach of contract (eg. where the seller can not remove a mortgage or caveat over the title by the settlement date), can the Buyer claim damages for that breach without tendering the balance of the purchase price, to show they were ready, willing and able to complete the Contract?
A. Generally, if the Seller has advised that they definitely can not complete the sale, the Buyer may not be obliged to tender the balance purchase price at settlement but will need to show that at settlement they would be ready, willing and able to settle, to claim damages. But if the Seller has breached a non essential (minor) term of the Contract which doesn’t give the Buyer the immediate right to terminate the Contract at that time, the Buyer will need to tender the balance of the purchase price at settlement.
TIP: If the Seller is in breach of Contract it is wise for the Buyer to arrange settlement, calculate settlement figures, attend settlement and tender the balance purchase price or at least attempt to tender and show that this was done.
31 January 2011 - Who receives the original Contract?
Q. Which party should be given the originally signed Contract of Sale after it is signed, the Seller or the Buyer?
A. The usual practice is for the Buyer to be given the originally signed Contract.
Why? Under the Standard REIQ Contract the buyer must pay all Stamp Duty on the Contract. Under the Duties Act the original of a document is normally required to be stamped rather than a copy. Accordingly, the Buyer should be given the originally signed Contact.
Note – The duplicate copy of a Contract is not normally used for stamping although if the original contract has not been stamped the duplicate can be used for stamping purposes.
24 January 2011 Details regarding tenancies in the Reference Schedule of the REIQ Contract
Q.If there is a tenancy in place in respect to a property do you put details of the tenancy in the Reference Schedule in the Contract under the heading “Tenancies”?
A. Yes, if the property being sold is subject to the tenancy. If, however, the property being sold is not to be subject to a tenancy after the settlement date then the tenancy details are not included in the Contract. If nothing is stated in the Reference Schedule in the Contract under the heading “Tenancies” it will be presumed that the property is sold with vacant possession from the settlement date.
NOTE: It does not matter whether the tenancy is a periodic tenancy or fixed term tenancy. Details of the tenancy are only included in the Contract if the Contract is subject to a tenant i.e if after the settlement the parties have agreed that a tenant will remain in the property.
It is the Sellers obligation to make sure that if the Contract is not to be subject to a tenancy that the tenant vacates the property on or before the settlement date.
17 January 2011 - Completion Dates that fall on a non-business day
Q.If a completion date falls on a non-business day (eg. Sunday), is completion effected on the previous Friday or the following Monday?
A. When a condition (such as the building inspection date, finance date, completion date or any other date referred to in the Contract) falls due on a weekend or public holiday then the date is automatically extended to the next business day.
TIP: Wherever possible always check your calendar for a business day when completing the Contract. This way the Buyers and Sellers will not be confused as to when the condition is due.
10 January 2011 - Buyers Rights to Access Property being Purchased
Q.When is a Buyer entitled to access a property after the Contract is signed but before the settlement?
A. Under Clause 8.2 of the Standard REIQ Terms of a Contract a Buyer (and their consultants) may enter the property (after giving reasonable notice to the Sellers) as follows:
- To read the water meter
- To carry out building, pest and/or pool inspections
- To value the property
- Once to inspect the property prior to settlement
TIP: We recommend Buyers inspect the property prior to settlement on either the day before or preferably the day of settlement. We suggest Buyers contact their Real Estate Agent to make arrangements for inspections.
6 December 2010 - New Version of Contracts
ALERT – The REIQ & Queensland Law Society have released new Contracts.
Effective from 1 December 2010, is a new House & Land Contract Version 8 and a new Contract for Residential Lots in a Community Titles Scheme Version 4. It is recommended that the correct and current version of the Contracts are used from 1 December 2010. The most significant change to the Contracts is the inclusion of the new swimming pool safety compliance requirements:
We have attached a copy of the new 8th Edition House and Land Contract & 4th Edition Contract for Residential Lots in a Community Title Scheme.
29 Novmeber 2010 Contracts with side agreements to accept a rebate off Purchase price
Q.What is the legal effect of a side agreement whereby the Seller agrees to accept an amount lower than the purchase price on the Contract?
A. If there is a condition in the Contract itself and it can not be removed from the Contract, which is given to the Buyers financier there should not normally be an issue.
If, however, such a condition was in a separate agreement or if it was capable of being removed from the Contract (eg. because it was written on a separate page) then there is likely to be an issue.
The problem is that the Buyers intending financier may not be made aware of this condition. If that is the case there is likely to be fraud committed against the Buyers financier.
The reason is that the Buyers financier thinks that the purchase price is as stated in the Contract and lend on that basis (and probably do a valuation based around that price) but in reality the purchase price will be different (lower). This act constitutes a fruad against the Buyers financier.
TIP: Unless you are certain that the Buyers financier has been told the full story these agreements should be avoided.
22 November 2010 Pool Safety Certificate
From 1 December 2010 (ie. contracts dated before that date and settling after it or contracts dated on or after that date) a seller of a house or unit which contains a pool, must before settlement, give the buyer a copy of a Pool Safety Certificate (Form 23).
If no Pool Safety Certificate exists, the seller must give Notice in the approved form (Form 36) to the buyer, prior to the contract being entered into (but, if the contract is dated before 1 December, Notice must be given before settlement, not before the contract is formed) and to the relevant government body, before settlement.
A buyer settling on or after 1 December 2010, where there is no Pool Safety Certificate takes on the cost and risk of obtaining the Certificate, within 90 days of settlement, regardless of whether the seller gave the Notice referred to above.
The sellers failure to provide a Certificate or Notice of No certificate does not entitle the buyer to terminate the contract or claim compensation under the Act. The seller is, however, liable to a substantial penalty.
All pool owners must obtain a Certificate within 5 years of 1 December 2010, unless the property is sold or leased in that time. In that case they need to comply earlier.
There will be a register of properties with a pool, which can be searched and copies of Certificates can be obtained.
Form 23 (Pool Safety Certificate) and Form 36 (notice of no Pool Safety Certificate) are available from www.dip.qld.gov.au/forms-templates/pool-safety-forms.html <http://www.dip.qld.gov.au/forms-templates/pool-safety-forms.html>
TIP: For contracts entered into before 1 December, but settling after that date, buyers need to be aware of these new rules and they may wish to have a special condition in the contract allowing them to satisfy themselves regarding whether a certificate can be obtained and the likely cost.
If you require any further information, please do not hesitate to contact us.
15 November 2010 Tips to Avoid Contract Delays during the Christmas Period
Q.I am preparing a Contract with a settlement date of 31 December 2010, are all the necessary businesses open to finalise the transaction?
A. No, the Christmas Period can cause major issues due to office closures of vital components of the settlement process. Whilst the majority of financial institutions are open, they are generally operating on skeleton staff which can lead to settlement delays during the Christmas Period. It should also be noted that the Titles Office is closed from Christmas Eve to 4 January 2011, which means any lodgments during this period cannot be processed. In addition to the Banks and Titles Office, a large number of Law Firms usually close from Christmas Eve until early January which can also cause issues in obtaining instructions for any conditions that fall during this period.
Whilst our office will be open and operating during this period, we suggest that your Contracts Administrator calculates the settlement date prior to Contracts being signed to ensure that they are prepared with a settlement date that falls either before Christmas or after the New Year to minimise delays and possible terminations during the festive season.
9 November 2010 - Contract for Sale of Property Owned by a Deceased Person
Q.Who should be named as Seller of a property owned by a deceased person?
A. The Sellers name on the Contract should be the name of the legal personal representative (ie. the executor named in the Will or the Admistrator).
The Sellers name on the Contract should not be the deceased persons name. It should also be stated in the Contract that the Seller is the legal personal representative. (ie. John Smith as personal representative of “name of deceased”.)
TIP: The legal personal representative of the deceased should not contract to sell a property until the personal representative is registered on the Title as the registered proprietor. A purchaser of the property should confirm prior to settlement that the personal representative does have the power to Sell the property.
25 October 2010 Stamp Duty on Transfers of Residential Land Between Parties to a marriage or de facto relationship
Q.Is a transfer of an interest in a residential property by one party to a marriage (or de facto relationship) to the other party exempt from transfer duty?
A. Yes, if:- 1. the transfer is from one party to a subsisting marriage (or de facto relationship) to the other;
2. the transfer is done by way of gift (ie. without valuable consideration) eg. a transfer “by way of natural love and affection”. Generally, this will apply even through there may be an existing mortgage and hence the person acquiring the interest is assuming part of the debt under the existing mortgage;
3. after the transfer they will own the land as Joint Tenants (or Tenants in Common in Equal Shares); and 4. the residence will be the principal place of residence of the parties from the date of the transfer.
11 October 2010 Transfer from a Person who is not the Seller
Q.Does a Buyer have to accept a transfer of land from a person who is not the Seller named in the Contract of Sale?
A. Generally, no. The standard REIQ Contract requires the Seller to give the Buyer at settlement a duly executed transfer of land, from them as Seller, capable of immediate registration, which means it must be a transfer from the registered owner of the land to the Buyer. If the Seller is not the registered owner of the land they can not give a transfer which complies with the terms of the Contract. A Buyer does not have to accept a transfer from a person that is not the Seller unless there is a Special Condition inserted in the Contract directing them to do so.
TIP: – If the Seller will not be the registered owner of the land at the time of settlement (eg. because the Seller is buying the property from a third party and on-selling simultaneously to the Buyer) the Seller must direct the registered owner to execute a transfer in favour of the Buyer (“a transfer by direction”). If the Seller needs a transfer by direction they must ensure there is a special condition in the Contract to that effect (ie. requiring the buyer to accept a transfer executed by the registered owner (who is not the Seller) and the Buyer needs to acknowledge that at settlement the Seller will not be the registered owner.
4 October 2010 - ALERT – New Form 30c Warning Statement
Effective from 1 October 2010, is a new Form 30c Warning Statement Version 6. The current version of the Form must be used from 1 October 2010.
Failure to use the correct form can lead to the Buyer terminating the Contract under Section 370 within 90 days of receiving a copy of the relevant Contract unless settlement occurs earlier.
We have attached a copy of the new Version 6 Warning Statement and suggest that you save a copy to your database.
If a Buyer elects to terminate a Contract under the Cooling Off Period, the Seller must refund the deposit within 14 days of termination.
Please feel free to contact us should you have any queries regarding the changes.
Changes to PAMD ACT & BCCM Act - Effective 1 October 2010
(see also Fast Facts 30 Aug 2010)
Q. What changes are about to commence affecting the process for entering contracts?
A. A simplified process for entering into contracts for the sale of residential houses, land and units will commence as of Friday 1 October 2010.
Note: 1. The new laws will apply to any contract entered into before 1 October and settled after that date and any contract entered into on or after that date.
2. There will be a new PAMD Form 30c – this is not yet available.
As there will be a new PAMD Form 30c from 1 October, if a contract is posted before that date you must necessarily use the old version of the Form 30c. If the contract is not received in the post until on or after 1 October the contract will have the wrong version of the Form 30c. The contract may be terminated. Therefore, we suggest you either hold off sending documents, if they will not be received in the ordinary course of post before 1 October, or hand deliver or courier the documents to a buyer in those last few days before 1 October.
Summary Of The New Procedure For Entering Contracts From 1 October 2010.
1. When the Seller/Agent gives a proposed Buyer a proposed contract (whether or not the Seller has signed it) -
(i) attach a Warning Statement PAMD Form 30c ( and if a unit, a BCCM Form 14) to the proposed contract in a secure way eg. stapled or bound ( If sent by email or fax, at the same time as the proposed contract.), so that all documents appear to be a single document.
(ii) give a clear statement to the Buyer, directing the Buyers attention to the Form 30c and if applicable Form 14 and the proposed contract. This can be done by a simple letter. Eg.“ Your attention is drawn to the Warning Statement, ( if a unit, the Information Statement ) and the proposed relevant contract accompanying this letter.”
2. The new legislation makes no distinction between giving documents to a buyer by hand, post, fax or email etc. The current technical differences for sending documents by hand, post, fax email etc will no longer apply.
3. It is no longer essential that the Form 30c and Form 14 are the top pages and attached in the correct order. However, we recommend the Form 30c and if applicable, ,the Form 14 are attached in that order and then behind those attach the contract documents. We also recommend the Buyer be required to sign the Form 30c before they sign the contract to limit a buyers rights to terminate under s.370 PAMD Act).
4. Use the correct versions of the PAMD Form 30c and BCCM Form 14.
5. If negotiations take place before the contract is finalised, as long as the property and parties remain the same, it will not be necessary to keep repeating the procedure in paragraph 1(i) and 1(ii) above
6. It is an offence under the Act not to give the documents referred to in paragraph 1 above.
7. Where the Seller gives the Buyer the contract after being signed by all parties there must be a Form 30c (and if a unit, the Form 14) attached to the relevant contract..
8. Terminating a contract – where no PAMD Form 30c attached, when a buyer is given a proposed contract –
(i) The Buyer can terminate at any time before settlement.
(ii) The Buyer cannot terminate if they signed a Warning Statement attached to a proposed contract before the Buyer signed the proposed contract.
(iii) Termination must happen not more than 90 days after the day the Buyer receives a copy of the contract from the Seller.
20 September 2010 - Noficiation of existence of Electrical Safety Switch
Q.What are the Sellers and Buyers obligations regarding an electrical safety switch?
A. The Seller of a residential house or residential unit must notify the Buyer in writing whether an approved safety switch has been installed for the general purpose socket outlet in the house/unit. This must be done prior to the Buyer taking possession of the property. The standard REIQ Contract makes provision for this to be done. If notice is not given to the Buyer or if the notice is wrong, false or misleading, the Seller will be liable to pay a monetary penalty.
The Form 24 which accompanies the land transfer document provides that the Seller must notify the regulator under the Electricity Act in writing whether there is an approved safety switch, within 90 days of the Buyer taking possession of the property. There is a monetary penalty payable by the Buyer is this is not done.
It appears that the failure to give the correct notice does not effect the validity of the Contract.
Once the Seller has given the Buyer notice, then if a general purpose socket outlet was installed in the residence prior to 1 July 1992 and there is no electrical safety switch the Buyer must have one installed within 3 months from the date of possession. Again there is a monetary penalty payable by the Buyer is this is not done.
TIP: If a Seller finds out that their statement regarding the existence of the safety switch is wrong they should immediately notify the Buyer of the correct information.
When a Buyer is negotiating to buy a property they should establish whether a safety switch exists and if not, factor in the cost of installing one when they consider the purchase price.
13 September 2010 - Agents Entitlement to Commission
Q.When is a Real Estate Agent entitled to commission?
A. The Property Agents and Motor Dealers Act sets out criteria regarding an agents entitlement to commssion:
- The agent must be licensed under the Act;
- If the agent is a corporation they must hold a corporate license under the Act;
- The agent must be authorised under the license to perform the particular activity eg. the agent must hold a real estate license to sell property;
- An agent must be properly appointed under the Act ie. an agent must be appointed in writing, in the approved form, prior to the agent undertaking any work for the Seller;
An agents entitlement to commission varies depending on the terms of the agency agreement ie. whether the appointment is an open, sole or exclusive appointment. Under an open listing, an agent must be the effective cause of sale (ie. the agent must bring introduce the Buyer to the Seller) of the property to be entitled to the commission. Under a sole agency an agent is not entitled to commission if the Seller is the effective cause of sale. Under an exclusive agency the agent is entitled to commission if the property is sold during their term of appointment regardless of who sold the property.
6 September 2010 - Certificates of Title
Q.Does the owner of a property have a right to have a Certificate of Title, issued by the titles office, to show their ownership of a property?
A. Yes, but under current law a certificate of title will only be issued to the registered owner of a property if they have requested the registrar of titles to issue one to them. Currently all records are held electronically on the Land Titles database. If the property is subject to a mortgage, a certificate of title will only be issued if the mortgagee gives their consent. Application for a title is made using a Land Title Act Form 19. Any of the old style forms of Certificate of Title will be kept by the Titles Office when the next transaction relating to the property occurs. Any title from that time on will be the new form of title which does not show the history of the property in the same way as the old deeds.
TIP: If a certificate of title for a property has been issued but is lost, urgent steps will need to be taken to obtain a replacement as this process can take some time and could delay the settlement of the sale of a property and cause the seller to be in default under a Contract of Sale.
30 August 2010 - PAMD Act Changes to Contract Process - Effective 1 October 2010
Q.Has there been a change to the process of preparing and signing contracts?
A. Not yet but changes have been made which will take effect from 1 October 2010. Until that date the existing processes remain the same.
The amendments which commence 1 October 2010 relate to simplifying the process of entering into contracts for residential property.
In essence, the intent is to simplify the current very technical process of preparing and delivering contracts which is intended to avoid contracts being avoided on purely technical grounds.
Full details of these changes will be advised in future Fast Facts. In brief the changes mean the law is not as strict about how and where the warning statement is attached and it will be easier to submit counter offers without having to follow the strict processes of the past.
It is important to note –
(a) the transition from the existing to the new laws will occur at 5 pm on 30 September 2010.
(b) At that time a right to terminate a contract under the existing law will be lost.
(c) The new laws will apply to all contracts which exist as at 1 October 2010 as well as to any contract entered into after that date.
Please note that the Queensland law Society’s insurer has advised that lawyers will be required to notify all buyers that if they have a valid right to terminate a contract which settles after 30 September 2010 under the existing laws, that right will be lost after 30 September 2010.
23 August 2010 Fixtures & Chattels
Q.What is the difference between Fixtures & Chattels?
A. Fixtures are objects which are fixed to the land eg. the house structure and objects physically attached to a house.
Chattels are moveable property which are not regarded as fixed to land. Generally, if an object is intended to become a permanent part of the land (at least for an indefinate or substantial period) it will be regarded as a fixture. If it has only been fixed with the intent that it remains in position for temporary purpose then it is likely to be a chattel.
A chattel can become a fixture by being fixed to the land. If a chattel is fixed to land to any extent, by any means other than it’s own weight then it is probably a fixture. If it is only kept in place by it’s own weight then it is probably a chattel.
Fixtures will usually include, for example – stoves, hot water system, carpets, blinds, clothes line, satelite dish, TV antenna, in ground plants and pool filters.
Chattels usually include, for example – washing machines, dryers and fridges.
In the Reference Schedule to the Contract, details of any fixtures which are not being sold to the Buyer need to be included and as well details of any chattels being sold to the Buyer need to be included.
TIP: When in doubt about whether an item is a fixture or a chattel, the Seller and Buyer should specifically agree on what is being purchased and what isn’t and note those details in the Reference Schedule to the Contract.
16 August 2010 - Waiving the benefit of a Condition in the Contract
Q.Who has the right to waive the benefit of a condition in the Contract?
A. When a party no longer wishes to rely on a condition, whether or not the condition has been satisfied, they may wish to advise that the condition is waived. The party who has the benefit of the condition should normally be able to waive the condition, although this may be arguable in some cases.
Clauses such as the finance and building and pest inspection clauses are examples of clauses for the benefit of the Buyer, which can be waived by the Buyer. Where the condition is for the benefit of both parties, then the consent of both parties is required to waive the condition. An example of this type of condition is where the settlement date is dependent on a condition in the Contract.
TIP: To avoid disputes, a condition should always set out clearly for whose benefit the clause was inserted and the circumstances in which the condition can be waived and by whom.
9 August 2010 - Pool Fence Compliance
Q.I am selling a property with a swimming pool. How do I ensure that the pool fence is compliant?
A. All swimming pools in Queensland must be enclosed by fencing that meets with the state governments pool fencing legislation. It is the responsibility of property owners with pools to ensure that compliant pool fencing is in place at all times.
Attached is a copy of the governments two-staged improvement strategy aimed at reducing the number of drowning of young children in Queensland.
Under Queensland pool fencing laws owners must:
- Make sure that a compliant fence is in place and maintained
- Display a warning sign when a pool is under construction
- Ensure pools with building applications lodged on or after 1 October 2003 display a CPR sign
Tenants also have responsibilities, including:
- not keeping a pool gate open
- ensuring there are no objects that would allow children to access the pool unattended.
From late 2010 property owners must obtain a compliance certificate for their pool when selling their property. If the pool doesn’t meet the compliance standards, a compliance notice will be issued. If the fence remains non-compliant after 20 days, the officer can issue a fine or refer the matter to the Magistrates Court.
2 August 2010 - Building Work by Owner Builder
Q.Is an owner builder (or unlicensed builder) who is selling a property, on which building work has been done, required to give any notice to a Buyer of the property?
A. If the building work is done by a person who is not licensed to carry out that work (eg. an owner builder) within 6 years of the date of sale, the Seller must provide a written notice to the Buyer containing details of the Building work, in the prescribed form, prior to the signing of the Contract of Sale.
If a notice is not given, the Seller is deemed, by the Queensland Building Services Authority Act, to have given a contractual warranty to the Buyer, that the work was carried out properly.
26 July 2010 - Release of Deposit
Q.When and to whom is the deposit to be released by the deposit holder (stakeholder)?
A. There isn’t one answer to this question. It depends on the circumstances. Set out below are a few likely scenarios:
When a Contract is settled the deposit can usually be released to the Seller.
The deposit can also be released if both parties authorise. in writing, its release and nominate to whom it is to be paid.
Clause 2.4 of the REIQ Contract allows the deposit to be released to the Buyer if the Contract is terminated without default by the Buyer or if there is a default by the Buyer, the deposit is to be released to the Seller.
If there is a dispute as to who is entitled to the deposit:
1. A Seller or Buyer can give written notice of dispute to the deposit holder (which is generally the Agent or Sellers Solicitor). The deposit holder must then retain the deposit in their trust account.
2. Either party can then give notice to the deposit holder of the resolution of the dispute and to whom the deposit is payable or notice that legal action has been commenced to decide who is entitled to the deposit.
TIP: The deposit holder should always obtain confirmation in writing from both parties that a matter has settled, prior to releasing the deposit to a Seller.
19 July 2010 - Foreign Buyers
Q.Should a foreign buyer make a Contract to buy a residential property subject to Foreign Investment Review Board (FIRB) approval?
A. Yes, unless prior written approval has been obtained to purchase the property or the Buyer is specifically exempted under the Foreign Acquisitions and Takeovers Regulations or if a home developer has obtained prior approval from the FIRB.
If a property is to be purchased at auction, prior written FIRB approval must be obtained. After auction, the FIRB need to be advised whether the Buyer was successful at auction and if so a copy of the Contract needs to be sent to them.
12 July 2010 - New Version of Contracts
ALERT – The REIQ & Queensland Law Society have released new Contracts.
Effective from 1 July 2010, is a new House & Land Contract Version 7 and a new Contract for Residential Lots in a Community Titles Scheme Version 3. It is recommended that the correct and current version of the Contracts are used from 1 July 2010.
The most significant changes to the Contract for Houses and Residential Land are:
- Place of Settlement – If Brisbane is inserted here, this is a reference to Brisbane CBD. In cases where the parties intend settlement to be outside the Brisbane CBD, this should be expressly identified in the Reference Schedule.
- Clause 1– Some definitions have been added or amended. “Bond” means a bond under the Residential Tenancies and Rooming Accommodation Act 2008. “Court” includes and tribunal established under statute. The new definition of “Essential Term” was amended from previous versions to allow for the termination by either the Buyer or Seller for a breach of an essential term. Essential Term includes, in the case of breach by:
- The Buyer: Clauses 2.2, 2.5(1), 5.1 and 6.1; and
- The Seller: Clauses 5.1, 5.3(1)(a)-(c), 5.3(1) (d)(i), (ii) and (iii), 5.5 and 6.1
but nothing in this definition precludes a Court from finding other terms to be essential.
- Clause 3 – Finance – In the notice from the Buyer to the Seller regarding lack of finance approval the Buyer must also notify the Seller that it terminates the Contract.
- Clause 4 – Building and Pest Inspection Reports – In the past, a Building and Pest Inspection Clause was considered satisfactorily met if no advice to the contrary was received by 5pm on the inspection due date. However, this self satisfying effect of the previous building and pest inspection report has been removed and now sets out the process a Buyer must follow in regards to the results of a building or pest inspection report.
A Buyer must notify by 5pm on the Inspection Date if a satisfactory Inspector’s report has not been obtained or that this Clause has either been satisfied or waived by the Buyer. The Seller has the right to terminate the Contract by notice to the Buyer if the Buyer has not given notice by 5pm on the inspection date.
- Clause 9 – Parties’ Default – the earlier version of the REIQ Contracts made specific provision for a seller’s rights in the event of a default by the Buyer. However, there were no reciprocal rights expressed in the Contract covering the Buyers rights against the Seller. The amendments to Clause 9 now provide the rights for both the Seller and Buyer to take action in the event of default by either party. In effect, these amendments balance up the rights of the Seller and Buyer by expressly providing contractual terms in the event of default.
- Clause 10.8 – Severance – This new Clause allows for an offending term to be severed from the contract but allow the continued operation of the rest of the Contract.
To ensure consistency, the Contracts for Lots in a Community Title Scheme (Third Edition) has incorporated similar amendments to those referred to above.
We have attached a copy of the new 7th Edition House and Land Contract & 3rd Edition Contract for Residential Lots in a Community Title Scheme.
Please feel free to contact us should you have any queries regarding the changes.
5 July 2010 Changes to First Home Owners Grant
From 1 June 2010, there is a new $4,000 Regional First Home Owners Grant (RFHOG) for new homes in Regional Areas.
The Grant is an additional $4000 on top of the existing $7000 First Home Owners Grant, and is available to eligible first home buyers.
To be eligible for the $4000 regional bonus, the following must apply:
- You must be eligible for the $7000 First Home Owners Grant
- You must either build or buy a new home – the bonus does not apply to established homes
- The home must be located in Queensland regional areas – this basically means outside the South East Queensland area (see map attached ).
- The commencement date (i.e the contract date or for owner-builders, the date the foundations are laid) must be between 1 June 2010 and 30 June 2011 (inclusive). However, there is no set time that the building must be completed.
If you require further information please do not hesitate to contact us.
28 June 2010 - Payment of Balance Purchase Price?
Q.How must the balance purchase price be paid at settlement?
A. Clause 2.5 of the Standard REIQ Contract requires the Buyer to pay the balance purchase price by Bank Cheque at settlement, as directed by the Seller. A bank cheque is defined in the Contract as including a cheque drawn by a building society or credit union on itself. It does not include a cheque drawn by a building society or credit union on a bank.
A Seller does not have to accept any other type of cheque.
15 June 2010 - Contract subject to Tenancy?
Q.Is a Buyer entitled to vacant possession of the property if, on the Contract, it is stated that there is currently a tenant?
A. No. If there is a tenant in the property and the tenancy details are set out in the Contract the Buyer will acquire the property subject to the tenancy and the Buyer will take over the tenancy. The Tenant will remain in the property subject to the terms of the tenancy agreement. If there is a tenant in the property, but the property is being sold with vacant possession and the Contract does not show details of the tenancy, then the Seller must remove the tenant prior to completion.
TIP: If a Contract is subject to a tenancy the Buyer should find out the details of rental, outgoings, bond etc and obtain a copy of the Tenancy Agreement. The Seller should notify the tenant of the sale and the details of the new owners.
7 June 2010 - What is a Power of Attorney
Q.What is a Power of Attorney?
A. A Power of Attorney is a legal document authorising another person, such as a trusted friend or relative, to act on your behalf in your affairs if you:
- Go overseas
- Take an extended holiday
- Suffer poor health
- Reach an age when you need greater assistance
A General Power of Attorney is usually used in business context by a corporation or an individual.
An Enduring Power of Attorney is usually used in the event of an accident, debilitating circumstances or incapacity, such that the Attorney has the power to deal with all or any part of your financial, personal and health matters.
31 May 2010 - Contaminated Land / Environmental Register
Q.Does the Seller of a property have to notify the Buyer that land is recorded in the Contaminated Land Register or Environmental Management Register?
A. If land is recorded in the Contaminated Land Register or Environmental Management Register the Seller must, before entering into a Contract to dispose of the property, give written notice to the Buyer about the recording of the particulars in the registers and if the property is subject to a site management plan, details of the plan.
If the Seller fails to give this notice, the Buyer may terminate the Contract by written notice to the Seller before settlement or possession under the agreement, whichever is the earlier.
Upon termination all monies paid by the Buyer to the stakeholder must be refunded.
Monday 17 May - 2010 Cooling Off Period
Q.When does the Cooling Off Period technically start and finish?
A. The Cooling Off period begins any time on the day that a signed Contract is received by the Buyer or their Solicitor and ends at 5:00pm on the fifth business day (not including weekends or public holidays).
In practice, this means that if a Contract is received by the Buyer or their Solicitor at 11:59pm on Monday, then the cooling-off period ends at 5:00pm Friday (assuming that no public holidays occur during this time). If the Contract is received by the Buyer at midnight on Monday, then the cooling off period ends at 5:00pm the following Monday (assuming that no public holidays occur during this time.
10 May 2010 Property Boundary Concerns
Q.What can a homeowner do if they believe there is a problem with a boundary line or there is an encroachment over their land?
A. If a person believes that a boundary line is incorrect, then they may at their own cost, conduct a survey to establish the correct boundary line. If they want a neighbour to contribute to the cost of the survey, they should give notice of intention to survey. If the survey confirms their view of the boundary, then the neighbour must contribute one half of the cost of the survey.
If part of a neighbour’s house, shed, pool or other construction, goes over the boundary line (including hanging over without actually touching the land) it is called an encroachment and legal action may be taken to:
- Have the encroachment removed
- Be compensated for the encroachment
- Have the boundaries redrawn with appropriate transfer of land and/or compensation
4 May 2010 - Mortgagee in Possession
Q.When a mortgagee is selling a property due to the owner being in default, how should the Sellers name appear on the Contract?
A. The Seller appear as “XYZ Bank as mortgagee exercising power of sale under mortgage no. ABC”.
Monday 26 April 2010 - Contaminated Land / Environmental Management Register
Q.Does the Seller of a residential property have to notify the Buyer that land is recorded in the Contaminated Land Register or Environmental Management Register?
A. If land is recorded in the Contaminated Land Register or Environmental Management Register the Seller must, before entering into a Contract to dispose of the property, give written notice to the Buyer about the recording of the particulars in the registers and if the property is subject to a site management plan, details of the plan.
If the Seller fails to give this notice the Buyer may terminate the Contract by written notice to the Seller before settlement or possession under the agreement, whichever is the earlier. Upon termination all monies paid by the Buyer to the Seller must be refunded. The parties can not contract out of this requirement. A failure to advise the Buyer may also amount to misleading and deceptive conduct under the Trade Practices Act.
Monday 19 April 2010 - Possession of Property by Buyer Prior to Settlement
Q. What happens when a Buyer takes possession of the property prior to settlement?