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Significant Changes to Residential Contracts

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The Queensland Law Society and Real Estate Institute of Queensland have introduced some of the most significant changes to the standard residential contracts we have seen in some time. The updated contracts took effect from 20 January 2022 and contain several changes that impact contracts for sale of residential property.


What are the changes?

 

Extension of Settlement Date

Recently, there have been media reports of buyers losing their deposits because of a failure of their financial institutions to be able to settle on the settlement date. This change allows for either party to extend settlement date by up to 5 business days from the original settlement date.

It is important to note that this extension right can only be exercised up until 4pm on the settlement date and can only be for a maximum of 5 business days.

Smoke Alarm Requirements

The changes to the smoke alarm clause create a contractual obligation to ensure that all smoke alarms are compliant with the Fire and Emergency Service Act 1990 and Building Fire Safety Regulations 2008 prior to the Settlement Date of the contract. In order to be compliant, smoke alarms must:

  • Be photoelectric; and
  • Not also contain an ionisation sensor; and
  • Be hardwired to the mains power supply or hardwired or powered by a non removable 10 yu battery or a combination of both.
  • Be interconnected with every other smoke alarm
  • Installed in the following locations:
    • On each storey;
    • In each bedroom;
    • If there is no hallway, between the bedroom and other parts of the storey; and
    • If there are no bedrooms on a storey, at least one smoke alarm must be installed in the most likely path of travel to exist the dwelling.

If the seller fails to satisfy these requirements before settlement, the buyer will be entitled to an adjustment to the purchase price at settlement in the amount of 0.15% of the purchase price. Depending on the purchase price, this adjustment can be significant.

Agents in particular should be aware of the changes to the smoke alarm provisions to ensure that sellers are aware of the potential financial impact associated with a failure to comply with these provisions – we have already seen several instances where seller’s look to their agent to make good their loss because they simply weren’t aware of the changes.

Grace Period for Deposits

If a buyer is paying a deposit by way of electronic transfer, the changes allow a grace period for the buyer before the money must arrive in the deposit holder’s account. Previously, the money had to be in the specified account on the due date, or the seller could terminate the contract. The purpose of this change is to address the impact of delays in the deposit of money to accounts when using direct debit.

To ensure compliance with this change, a buyer needs to provide evidence of the payment to the deposit holder that payment has been made and the delay is not caused by the buyer.

Sellers should be aware that failure to pay the deposit will not put the Buyer in breach of the contract until the seller provided the Buyer with notice that there has been a failure to pay the deposit and provides the buyer with two business days to rectify the failure.

What does this mean for you?

Whether you are purchasing or selling a property, it is important to understand your obligations under your contract and negotiate any amendments to the standard terms before signing. The Redchip Property team can provide you with the right advice to ensure your property transaction proceeds smoothly and hassle-free.

If you would like to discuss anything residential property related, please contact our experienced Property Team on 07 3223 6100 or email redchip@redchip.com.au for an obligation-free discussion.

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