Residential Property, Land
Buying and selling residential property, whether it be vacant land, a house or a unit, is often the most important and exciting event in a persons life. There are many aspects to a conveyancing transaction that need to be considered - financial, legal and practical matters. At times these matters can be stressful, and we here at Affinity Lawyers pride ourselves on taking the stress out of the transaction and making your purchase or sale as seamless as possible.
It is crucial that a person receives the best legal and financial advice to ensure that the transaction is successful. In this respect, the below are some helpful summations of general contractual terms that a buyer or seller of residential land or property in Queensland may come across during the conveyance transaction. However, please be aware that the below is a general overview for information and or educative purposes only and does not constitute legal advice.
For Legal advice on your residential conveyance please do not hesitate to contact one of our friendly solicitors on (07) 5563 8970 or email firstname.lastname@example.org.
How does the Property Agents and Motor Dealers Act 2000 (“PAMDA”) affect you?
PAMDA requires that all proposed relevant contracts for the sale of residential property in Queensland have attached a PAMD Form 30c Warning Statement (“Warning Statement”).
The only exception is where the property is sold under the fall of the hammer at auction, however if the property is passed in, a Warning Statement must be attached to the contract.
The Body Corporate and Community Management Act 1997 (“BCCMA”) requires that all contracts in relation to lots in a community titles scheme have attached a BCCM Form 14 (“Information Sheet”). As with the Warning Statement, an Information Sheet is not required to be attached if the property is sold at auction.
Cooling Off Period
Under PAMDA, unless the buyer waives the cooling off period, the buyer is entitled to a five (5) business day cooling off period. This period starts on the day that the buyer or the buyer’s solicitor receive the contract signed by both parties, returned in accordance with the requirements of PAMDA. The cooling off period ends at 5:00pm on the fifth business day.
The buyer is entitled to terminate the contract during the cooling off period. If the buyer terminates the contract during the cooling off period, you are entitled to retain a termination penalty equivalent to 0.25% of the purchase price from the deposit. The balance deposit must be refunded to the buyer within fourteen (14) days following termination.
It is possible for a buyer to waive the benefit of the cooling off period by giving a properly completed Lawyer’s Certificate in the approved form before signing the contract. It is up to you whether you wish to insist on this from the buyer or not. If you require the buyer to waive the benefit of the cooling off period please telephone us to discuss.
Vacant land – Non residential use pre-contract notice
If you are selling vacant land through an agent or auctioneer and at the date of the contract the land is not able to be lawfully used for residential purposes your agent or auctioneer is required prior to entering into the contract to give the buyer a notice under sections 149/226 of PAMDA stating, amongst other things, that the land is not able to be lawfully used for residential purposes.
(a) you are selling vacant land;
(b) the land cannot be lawfully used for residential purposes; and
(c) your agent or auctioneer has not given a notice under s.149/s.226 of PAMDA that the land cannot be used for residential purposes,
you need to tell us immediately, as the buyer may have a right under s.150/s.227 of PAMDA to avoid the contract by giving a notice of avoidance within six (6) months of the contract date.
EXPLANATION OF SOME GENERAL AND OFTEN USED QUEENSLAND RESIDENTIAL CONTRACTUAL TERMS
Form of contract
There are two forms of contract recommended by the Real Estate Institute of Queensland and the Queensland Law Society and these are the most often used contracts for a residential sale or purchase in Queensland. They are:-
(a) Houses and Residential Land; and
(b) Residential Lots in a Community Titles Scheme.
That being said other contracts are in use throughout Queensland and specific advice should be obtained on all contracts as they may vary and or be amended.
Payment of the deposit is a sign of the buyer’s intention to proceed with the contract. It is usually a substantial amount (but no more than 10%). The deposit is held on trust until settlement and following settlement the deposit will be paid to you (usually net of the agent’s commission). It is therefore important that the deposit holder be either a solicitor or a real estate agent and that the deposit is held in a trust account.
If the buyer were to terminate for valid reasons in accordance with the contract, then the deposit may be repayable to the buyer. If the deposit is not paid on time or the buyer is otherwise in fundamental breach of the contract, the seller may be able to terminate the contract and forfeit the deposit.
If the contract is subject to finance, the buyer is required to take all reasonable steps to obtain finance approval and notify the seller as to whether finance is approved before 5:00pm on the finance date. If the buyer does not notify the Seller that finance is approved then the contract remains on foot and either party can terminate the contract.
The buyer also has a continuing right to waive the benefit of the finance condition up until the time the contract is terminated by either party.
Building and Pest Inspections
If the contract is subject to building and pest reports, the contract requires the buyer to take all reasonable steps to obtain the reports and notify whether the reports are satisfactory before 5:00pm on the inspection date. If the buyer does not notify that the building and pest reports are satisfactory then the contract remains on foot and either party may terminate the contract.
The buyer also has a continuing right to waive the benefit of the building and pest condition up until the time the contract is terminated by either party.
The property will generally be at the buyer’s risk from 5:00pm on the first business day after the contract date. Despite this, we strongly recommend that sellers maintain their insurance policy until following settlement in the event that the buyer does not insure the property and there is a loss.
The seller has a continuing obligation until settlement to take reasonable care of the property and if the property becomes “unfit for occupation” as a dwelling prior to settlement, then the buyer may have a right to withdraw from the contract.
What does time is of the essence mean?
This means that you must perform your obligations under the contract strictly by the due dates on the contract. For example, the buyer must be ready willing and able to settle on the settlement date, otherwise the Seller may either terminate or affirm the contract.
WARRANTIES AND DISCLOSURE
Under most contracts the seller gives certain warranties about various matters which could affect the property, in particular:-
(a) that they are the registered owner of the property;
(b) they are capable of completing the sale;
(c) there are no unsatisfied judgments, orders or writs affecting the property (and if a unit, the common property) and no current threats or claims that might lead to a judgment order or writ affecting the property (and if a unit, the common property);
(d) there are no unregistered leases or other dealings;
(e) in relation to the Environmental Protection Act 1994 (“EPA”):-
(i) there is no outstanding obligation to give notice under the EPA of a notifiable activity on the land;
(ii) you are not aware of facts or circumstances that may lead to the land being classified as contaminated under the EPA.
Consequence of breach of warranty
If they breach any of these warranties the buyer may be able to:-
(a) terminate the contract no later than two (2) days before settlement; or
(b) claim compensation, prior to settlement, and proceed to completion.
Property adversely affected
If the property is adversely affected at the contract date because:-
(a) the present use is not lawful;
(b) the land is affected by a proposal of a competent authority e.g. Transport Infrastructure;
(c) access or any services to the land passes unlawfully through other land;
(d) an authority has issued a current notice to treat, or notice of intention to resume;
(e) the property is affected by the Queensland Heritage Act 1992 or is included in the World Heritage List,
and these facts are not disclosed in the contract, thenthe buyer may be entitled to terminate the contract up until two (2) business days prior to settlement. If the buyer does not terminate in accordance with the contract, the buyer will be treated as having accepted the property subject to these matters.
What is defined as a “swimming Pool”
A regulated swimming pool is any excavation or structure capable of being filled with water to a depth of 300mm or more including a pool, spa pool/tub or wading pool, but generally does not include a fish pond (or similar ornamental water feature), dam, water tank, watercourse, spa bath in a bathroom (unless continually filled with 300mm or more of water) or birthing pool.
If you have any doubt as to whether a pool is situated on the property, then you should contact us on (07) 5630 6888.
OTHER IMPORTANT CONTRACTUAL MATTERS FOR YOU TO CONSIDER
If the present use is not lawful under the relevant town planning scheme as at the contract date and this has not been disclosed in the contract then the buyer may be able to terminate the contract up until two (2) business days before the settlement date.
A contract can become an instalment contract for many reasons including the following:-
(a) the deposit is more than 10%; or
(b) the deposit is stated to be non-refundable in all circumstances; or
(c) the buyer is given a rebate off the purchase price; or
(d) the buyer is required to pay money to the seller (other than a 10% deposit) prior to receiving a transfer and the amount payable under the contract exceeds market value for what is provided in exchange. For example, a rent to buy contract may require the payment of instalments which exceed the market rent that would otherwise be payable.
Effect of instalment contract
The effect of the contract being an instalment contract is:-
(a) The seller cannot force the buyer to settle without giving a notice which requires the buyer to settle in thirty (30) days;
(b) The seller is prohibited from re-selling or re-mortgaging the property prior to settlement; and
(c) The seller may be required to comply with the National Credit Code, including the requirements for pre-contractual disclosure, ongoing notices and certain pre-requisites to enforcement.
An instalment contract should be avoided or at the very least, you should be aware the contract is or has become an instalment contract.
Transfer duty is a state tax which is payable on the transaction.
It is a liability of both the seller and buyer. However the contract determines that it is the responsibility of the buyer to pay this liability. If for whatever reason the buyer does not pay the duty then the Office of State Revenue may have recourse against the seller for the duty. This is, however, unlikely as the buyer will need to pay duty before the property can be registered in the buyer’s name.
Generally, the buyer is entitled (after giving reasonable notice to the seller) to enter the property once for the purpose of conducting a pre-settlement inspection to check on the condition of the property. The sellers needs to co-operate with the buyer and if a request for inspection is received, we suggest you make arrangements directly with your agent and ensure your agent is present when the buyer inspects the property.
We trust the above has been of assistance and please do not hesitate to contact our friendly legal team if you require further information on (07) 5563 8970 or email us at email@example.com.