New bill streamlines PAMDA warning system

The introduction of the Property Occupations Bill 2013 (“the Bill”) into State Parliament on 20 November 2013 has been long awaited for those in the development industry.

The Bill is one of four Bills that, if passed, will see the repeal and split of the Property Agents and Motor Dealers Act 2000 (PAMDA) reducing ‘red tape’ and streamlining buyer warning requirements for the sale of residential land while maintaining effective consumer protections by implementing various policy changes.

Caution is warranted for buyers and seller alike as there is no transitional period.

Although the Bill repeals PAMDA, the provisions of the Bill will only apply to contracts entered into after its commencement. PAMDA will continue to apply to contracts entered into but not the settled at the commencement. As such, any termination right afforded to a buyer under PAMDA will therefore remain available to the buyer despite any introduction of new legislation.

Important changes to contractual processes

By far the most significant aspect of the Bill is the proposal to streamline home sale contracts by significantly reducing the regulatory burden that has been imposed on these contracts through the complex process prescribed under the provisions of PAMDA. Essentially the Bill repeals the existing warning statement provisions and replaces them with a simple requirement for a prescribed statement to be included in particular home sale contracts.

The changes to the contract process include:

  •  The elimination of the need to direct the buyers attention to the PAMDA warning statement, the Body Corporate and Community Management Act (BCCM) information sheet or the proposed relevant contract;
  • The abolition of the requirement to give the buyer a Form 30C warning statement;
  • The removal of the requirement to give a BCCM Form 14 information sheet to the buyer in any sale of a lot or proposed lot in a community titles scheme;
  • The introduction of the requirement for the seller to ensure that in the contract once, immediately above, and on the same page as where the buyer signs, ‘the following conspicuously written words or words to like effect (must appear):

‘The contract may be subject to a 5 business day statutory cooling-off period. A termination penalty of 0.25% of the purchase price applies if the buyer terminates the contract during the statutory cooling-off period. It is recommended the buyer obtain an independent property valuation and independent legal advice about the contract and his or her cooling-off rights, before signing.

Significantly, the Seller should be aware that the above-mentioned requirements with respect to the insertion of particular words and their position in the contract do not apply to a counteroffer by a seller to a relevant contract proposed by the buyer, unless the property the subject of the proposed relevant contract changes or the buyer changes.

Sellers are offered some surety in that failure to include the relevant words or have them in the right location in the contract does not afford the buyer a right to terminate the contract. Failure to comply with these new provisions is an offence for which the seller, or the seller’s agent, will be liable to a maximum penalty of $22,000.00.


It should be noted that the Bill deregulates the real estate commission cap. Accordingly, there is no maximum commission that is fixed for residential property transactions.

Vacant land notices

The commencement of the Bill will see the removal of the requirement for an agent to provide a proposed buyer with a notice stating that the land cannot be used for residential purposes. This will also abolish the associated capacity for a buyer to terminate the contract where they have not been given the required notice and prescribed information.

Redefining residential property

The Bill prescribes the relevant requirements and contractual processes as they relate to ‘residential property’. The currently definition of residential property under PAMDA is lengthy and unnecessarily complex. The new definition is concise and exact,

‘residential property is real property that is used, or is intended to be used, for residential purposes but does not include real property that is used primarily for the purposes of industry, commerce or primary production.’

It is hoped that the new definition will overcome the need to look at planning schemes to decide whether property could be used for residential purposes. Vigilance is necessary to ensure that the contracting process is complied with necessarily.

Licencing regime overhaul

There are significant changes proposed to the current licencing regime. Some of the proposed changes include:

  • The consolidation of the existing licence categories – the Property Developer’s Licence and Property Developer Director’s Licence will be abolished meaning that Property developers and their employees will no longer need to hold a licence;
  • Despite the removal of the requirement for Property Developer’s and their employees to be licenced, property developers will still need to give certain disclosures in an approved form to a buyer before entry in to the contract such as disclosure with respect to benefits derived from the sale;
  • Under PAMDA, a corporation can only hold a real estate agent’s licence if a director of that corporation is a licensed real estate agent. This requirement is abolished. A corporation can hold a real estate agent’s licence provided it engages a licensed real estate agent to be in charge of the corporate agent’s real estate agency business at its registered office;
  • The requirement to keep an employment register will be abolished;
  • The requirement to display a licence in a place of business will be removed, however, licences must still be available for inspection upon request;
  • An employed licensee or registered salesperson will be able to be ´in charge´ of a principal licensee´s place of business (other than the principal licensee´s registered office); and
  • Where an entity acts in relation to the commercial property of a related entity, they will be exempt from the Act.

Exemption for sophisticated owners

Agents acting on behalf of ‘sophisticated owners’ (for example, shopping centre developers), in transactions in relation to non-residential and non-rural property, will be exempt from the need to follow the Bill’s procedure and requirements. A sophisticated owner is determined based on the total gross floor area of the property or the estimated value of the property. It is proposed that a regulation will specify the minimum area/value.

What do I need to do?

If passed, the Bill will result in major changes not only for residential purchasers and sellers but for all professionals within the development industry. It is paramount that all parties to the transaction be aware of their rights and obligations under the proposed innovative legislative framework.

If you have any questions regarding the contents of this article or if you require assistance in any property related matters please contact Robert Lalor of our office on (07) 3223 6100 or email robertl@redchip.com.au.

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