Fast Facts

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.

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?

A. Under Clause 8.5 of the Standard REIQ Contract a Buyer is required to:-

• Maintain the property in substantially the same condition as at the date of possession (fair wear and tear excepted)
• Insure the property to the Sellers satisfaction
• Indemnify the Seller against any expense or damage incurred by the Seller as a result of the Buyers possession.

The Contract states that the Buyer takes possession under a licence revocable at any time and that the Buyer is not a tenant. This means that if a Buyer is in breach of the Contract, the Seller can take possession without giving notice under the Residential Tenancies Act.

Please note that if the Buyer is to pay rent this may create a tenancy and as a result such a notice may need to be given. Also, if the obligation to pay rent is set out in the Contract, an instalment Contract will be created which can restrict the Sellers ability to terminate the Contract, as notice will be required to be given to the Buyer. This can be avoided if the payments are made under a separate Contract.

TIP: It is not advisable for a Buyer to expend money on improvements to a property when in possession, prior to settlement. If a Buyer does carry out improvements, they do so at their own risk. If the Contract is not completed the Buyer may not recover the cost of the improvements. To do so, they would need to show the Seller encouraged the construction of the improvements or acquiesced in the construction.

 

Monday 12 April 2010 - Finance Approval

Q. When is “finance approved” for the purposes of the finance clause (Clause 3) in the Standard REIQ Contract?

A. The finance clause contemplates that a financier makes an offer of finance on given terms, which the Buyer is able to accept. That is, the financier gives “approval of a loan” not “approval of a loan in principle”. “Approval of a loan” is different to “approval in principle”. Approval in principle does not constitute approval of a loan for the purposes of Clause 3. Generally, there is not an offer of finance which the Buyer can accept.

Also, there is no “approval” if an offer of finance is subject to the financiers usual terms and conditions, such as mortgage insurance, valuation and/or title search.

It is not effective for a Buyer to advise that finance has been “approved in principle” or “subject to the financiers usual terms and conditions”, as the Buyer will not have properly complied with Clause 3 by doing this i.e the Buyer will not have notified that finance is or is not approved. Conditional finance approval is not contemplated by Clause 3 and is not sufficient.

TIP: When obtaining finance a Buyer should make sure that they get clear unconditional approval of finance from their financier before they indicate whether they are satisfied under the finance clause.

 

Monday 5 April 2010 - Land Tax Concession on Principal Place of Residence

Q. Does the Land Tax concession for a principal place of residence apply if the land is not used solely as a principal place of residence?

A. Land Tax does not apply to land used solely as a principal place of residence. For the 2009 – 2010 and subsequent land tax years, a partial concession is available even if the property is not used solely as a principal place of residence.

If the non-principal place of residence purpose is not substantial a full concession may apply.

If the non-principal place of residence purpose is substantial a partial concession may apply.

Where, for example, a person works from home they may still obtain a full or partial concession depending on the circumstances.

 

29 March 2010 - Terms of Contract after Settlement

Q. After settlement and/or registration of a transfer occurs can any of the terms of the Contract be enforced?

A. Certain provisions of the Contract can be enforced after settlement and/or registration of a transfer. Essentially any term of the Contract which can take effect after settlement or registration will remain in force. That means provisions in the Contract regarding warranties, adjustment of outgoings, payment to the local council and the right to payment of the full purchase price are still enforceable. (Clause 10.6 REIQ Contract).

TIP: In some cases a demand for compensation needs to be made prior to settlement and/or registration of the transfer otherwise the parties rights may be lost (Eg. Where there is an error or mistake regarding the title such as a failure to disclose an easement in the Contract).

 

22 March 2010 - When is Transfer Duty calculated on combined purchases?

Q. If a Buyer contracts to buy more than one property from the same Seller, at or about the same time, can they pay stamp duty on the value of each block separately or is duty payable on the combined total value of all properties?

A. In this case transfer duty will be payable on the total combined values for all properties purchased rather than on each separate property. As a result the amount of duty payable will be higher than if duty was payable on each block separately, because of the way stamp duty scales work. For further information please do not hesitate to contact us.

 

15 March 2010 - Changes to First Home Owners Grant

Q. I am a First Home Owner, purchasing a property worth $760,000, am I still eligible for the Grant?

A. Legislation introduced into Parliament on 9 March 2010 proposes to lower the current cap of $1 million to $750,000 on all first home owner grant applications. The reduced amount will apply to all contracts entered into on or after 31 March 2010.

After the law is passed, you will not be able to claim the grant if:

• You enter into a Contract on or after 31 March 2010; and
• Your property is worth more $750,000 or more.

We shall keep you updated in relation to the above proposal, however if you have any queries in the meantime please do not hesitate to contact us.

 

8 March 2010 - Joint Tenants and Tenants in Common?

Q. What is the difference between a Joint Tenancy and Tenancy in Common?

A. A Joint Tenancy is where people own property together in undivided shares and with a right of survivorship ie. on the death of one owner, their interest automatically passes to the surviving owner(s) and that interest cannot be disposed of by Will or Deed. A Joint Tenancy can be severed by one owner and upon severance become a tenancy in common. A Tenancy in Common is where people own property in divided shares. An Owner may deal with their share of the property, and leave it in a Will or Deed and there is no right of survivorship. Ownership can be stated as being “in equal shares” or as a percentage (eg. 50% each or 25% & 75% respectively)

 

1 March 2010 - The effect of structures not approved by Council

Q. If there are structures on a property which have not been approved by Council can the Buyer terminate the Contract?

A. There is no provision in the Standard REIQ Contract which allows the Buyer to terminate a Contract if there are structures on the land which have not been approved by the Council.

TIP: If a Buyer is particularly concerned with obtaining information that all structures on the property have been approved by the Council then one of the following two options should be adopted:

(i) A Special Condition should be inserted in the Contract making the Contract subject to Council having approved all structures on the property and that condition should have a set time limit; or

(ii) The Buyer should conduct enquiries with the Local Council prior to signing the Contract to ascertain whether or not all necessary approvals have been obtained.

Commonly the type of structures which may not have Council approval are things such as swimming pools, pool fencing, pergolas, extensions, carports and other similar structures.

If you require assistance with drafting a Special Condition as suggested under Tip (i), please do not hesitate to contact us.

 

22 February 2010 - PAMD Form 30c Warning Statement

Q. Is it necessary to attach a fresh Warning Statement each time a Seller makes a written counter offer to a Buyer? Is it also necessary to direct the Buyers attention to the Warning Statement each time a counter offer is made to a Buyer?

A. Although the law is not entirely conclusive, the better view is that the answer is yes. At least one Court decision supports that view.

So, where a Buyer makes an offer and the Seller makes a counter offer on different terms, we suggest a fresh Warning Statement be attached to each offer made by the Seller when it is submitted to the Buyer. Also, each time a counter offer is made it is important to direct the Buyers attention to the Warning Statement, as you do with the initial offer from the Buyer.

The Buyer should sign the Warning Statement before they sign and accept the second or subsequent offer.

It is unlikely that the Seller could rely on the first Warning Statement as a Warning Statement for subsequent written offers.

Although this is a cumbersome procedure, the PAMD legislation seems to be interpreted strictly by the Courts. It is therefore better to be safe and do the extra paperwork. If the process is not done correctly, the Buyer may be placed in a situation where they can terminate to the detriment of the Seller.

For example: A Buyer signs a Contract (with a Warning Statement) offering to buy a property for $600,000.00. The Seller rejects the offer and counter offers to accept $620,000.00. At the time the counter offer is submitted to the Buyer, a fresh Warning Statement should be attached and signed by the Buyer before they sign the Contract. The Buyers attention should also be directed to the Warning Statement in the usual way.

 

15 February 2010 - Sustainability Declaration Version 2

Q. What is the current Version of the Sustainability Declaration?

A. On 4 February 2010 the Department of Infrastructure and Planning released a new, simpler version of the Sustainability Declaration. The new form is Version 2. The previous version of the form, which was released on 27 November 2009, will still be accepted, however you are encouraged to use the form attached herewith. On the spot fines will be issued to those who fail to comply from 1 March 2010. If you require further information please do not hesitate to contact us.

 

8 February 2010 - What does Time of the Essence mean?

Q. What does it mean that time is of the essence in the standard REIQ Contract?

A. “ Time is of the essence” means, that any time stated in the contract for doing something must be strictly complied with, otherwise the other party may be entitled to terminate the contract. If, for example, a purchaser does not comply with a condition due in the Contract by the date stated therein, then they will be in breach of Contract and the Vendor has several options available to them, including to terminate the Contract. If for some reason the purchaser feels they will not be able to comply with a condition in the Contract by the due date, then they may request an extension of that condition. We recommend that any request be issued in writing to the Seller before the expiration of the due date and confirmation must be received from the Seller that they are agreeable to the extension before the time limit for the condition expires, in order to avoid being in breach.

 

1 February 2010 - Changes to BCCM 14 Contract Warning for Units

Q. What Contract Warning needs to be attached to a Contract when buying a Unit?

A. In addition to the Contract and Form 30c you should have a separate BCCM Form 14 Contract Warning (Body Corporate Information). It is critical that the correct version of both the Form 30c & BCCM Form 14 are correct. Failure to comply may result in the Buyer being entitled to terminate the Contract. It has been announced that a new version 8 of the BCCM Form 14 Contract Warning (Body Corporate Information) was introduced from 1 January 2010. The previous version of this Form will remain approved for use until 1 April 2010. Attached for your reference is a copy of the new Form. For further information, please contact us.

 

25 January 2010 - Building & Pest Inspections

Q. If the Building and Pest Inspection is not satisfactory to the Buyer, can they simply terminate the Contract?

A. The Buyer may terminate the Contract by notice in writing to the Seller by 5:00pm on the Building and Pest Inspection Date.  If the Buyer fails to terminate by 5:00pm on the Due Date then the Buyer will lose their right to terminate the Contract and the condition will be deemed satisfactory. The Buyer must act reasonably in making their decision to terminate the Contract and must provide a copy of the report to the Seller, if requested.  If they do not act reasonably, then they may face legal proceedings and potentially forfeit their deposit.   
 

18 January 2010 - Changes to First Home Owners Grant & Application Form

Q. I am a First Home Owner, purchasing a property worth $1,050,000, am I still eligible for the Grant?

A. The Queensland Government have announced further restrictions to the First Home Owners Grant.

From 1 January 2010, people spending more than $1 million on their first home will no longer be eligible for the $7,000 State Government Grant.

In accordance with legislative changes, the Office of State Revenue have introduced a new First Home Owners Grant Application form, which is now effective and available from our office. The transitional period for use of the old form will end on 29 January 2010 from transactions prior to 1 January 2010.

The new form will also advise in which instances valuations will be required to be submitted as evidence of the value of the property. A valuation will be required to be submitted in all instances in which a related party has been involved in the transaction.

For further information relating to the new FHOG form, please contact our friendly team on 1300 553 750.

 

11 January 2010 - Sustainability Declaration

Q. What is the Sustainability Declaration for dwellings that was introduced on 1 January 2010?

A. The Sustainability Declaration is a compulsory declaration that must be made by the Seller (vendor) when selling a house, townhouse or unit. It will be required for the sale of a property from 1 January 2010. That includes properties listed but not sold prior to that date.

The Seller and Sellers Agent are each responsible for ensuring each Buyer receives the Declaration during the marketing campaign up until completion of the sale. Penalties apply to the Seller and Agent if this is not done.

Advertisements for the sale of a property must state where a copy of the Declaration can be obtained.

If the owner is unable to complete the form, they can seek help from another person to complete it on their behalf as long as the owner signs it. Where an owner cannot sign the form, a person authorised under power of attorney or other statutory power may sign the form.

The Declaration will identify the property’s environmental and social sustainability features in four key areas:

• Energy
• Water
• Safety
• Access

It is said that the Declaration is intended to increase awareness of a dwelling’s sustainable building features and act as an incentive for sellers to improve the dwelling’s sustainability performance. A Buyer will not have the right to terminate a contract if a Declaration is not provided, but false or misleading information in the Declaration may entitle a Buyer to claim compensation from the seller.

For further information please contact us on 1300 553 750.

 

14 December 2009 - Changes to First Home Owners Boost

Q. What are the changes to the First Home Owners Grant that will be effective from 1 January 2010?

A. The Australian Government have announced that the Boost will end completely on 31 December 2009. From 1 January 2010, the standard $7,000 First Home Owners Grant will continue to apply. Set out below is a table of how the Grant is currently structured:
Commencement date QLD grant Commonwealth boost (established homes) Commonwealth

Commencement Date	QLD Grant	Commonwealth boost (established homes)	Commonwealth Boost (new homes)
Before 14 October 2008	$7,000	n/a	n/a
14 October 2008 to 30 September 2009	$7,000	$7,000	$14,000
1 October 2009 to 31 December 2009	$7,000	$3,500	$7,000
1 January 2010	$7,000	n/a	n/a

 

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