In brief - Property Occupations Act to simplify contracts for residential property
The new legislation aims to simplify how contracts for residential property in Queensland are formed and removes what had been potential loopholes allowing buyers to terminate for technical breaches of PAMDA. The new legislation also changes how real estate agents are licensed and appointed.
A date for the new legislation to commence has not yet been set.
Warning statements no longer required
Once the new law commences, a prescribed warning statement will no longer be required to be attached to the contract. The requirement to attach an information sheet for a unit sale will also be removed.
Instead, particular wording will be required to be inserted on the signing page for a contract to buy residential property.
Importantly, if this requirement is not met, a buyer will no longer have a termination right. Instead, a fine of up to $22,000 may apply to the vendor or the vendor's agent.
Change to definition of residential property
Residential property will be defined to mean property that is used or intended to be used for residential purposes, but excludes property used primarily for the purposes of industry, commerce or primary production.
This definition is simpler than the definition in PAMDA. It remains to be seen whether the new definition will result in litigation, given the removal of the contractual termination right for residential property (i.e. for failure to include the required warning wording).
Change to definition of buyer of residential property
A buyer will be excluded from the operation of the new legislation in any of the following circumstances:
- Purchase of residential property at auction
- Purchase of residential property by a registered bidder at an auction by 5pm on the second clear business day after the property was passed in at auction
- A contract arising from the exercise of an option, if the parties to the contract are the same as the parties to the option
- Purchase by a buyer which is a publicly listed corporation or a subsidiary of the same
- Purchase of residential property if the buyer is the state or a statutory body
- Purchase by a buyer of at least three lots at the same time, whether or not in the same contract
The cooling-off period will remain, as will the potential termination penalty for buyers wishing to exercise their rights to terminate during the cooling-off period.
However, the process to waive or shorten the cooling-off period will be simplified. Instead of a solicitor being required to fill out a prescribed form, buyers will be able to waive or shorten a cooling-off period by written notice to the seller.
Removal of commission cap
There will be no legislative cap on commissions that can be charged. Instead, the requirement will be that commission must be worked out on the actual sale price of the relevant property.
The new law retains certain elements of PAMDA, including:
- Commission can only be recovered by a person or entity holding the relevant licence
- Commission can only be recovered if a signed appointment is in place
- If commission is received and the requirements of the new law are not met, the commission is potentially repayable
The new legislation is a timely reminder for real estate agents to check that they are complying with current PAMDA requirements, including in relation to the explanation required to be given if an agent is to be retained under a sole or exclusive agency and the requirement to provide a copy of fully signed appointment documentation within a certain timeframe. We note that non-compliance may result in fines being imposed on the real estate agent.
Removal of disclosure for vacant land
Agents will no longer be required to give particular notices to buyers for the sale of vacant land on which a residence cannot lawfully be constructed. Under PAMDA, if this notice is not given, a buyer has termination rights.
Removal of licensing requirement for directors of property developers
The need for directors of property developers to hold licences will be removed. However, a licensed real estate agent will be required to be in charge of a real estate agent business.
Property developers involved in the direct sale of property will be required to disclose to buyers any expected benefit to the property developer from a referring party connected to the sale.
Sophisticated parties and residential property transactions
There are exemptions from the legislation where the property transaction involves sophisticated parties.
Excluding residential and rural land, agents are exempt from compliance with the new legislation in either of these circumstances:
- The property has a total gross floor area or estimated value to be set by a future regulation
- Each party to a transaction owns property (apart from the property the subject of the transaction) having a total gross floor area or estimated value to be set by a future regulation
Commencement date of legislation yet to be announced
We note that the date for the new legislation to commence has not yet been set. We will issue a further alert once the commencement date and details of any transitional periods that may apply are known.
|Oliver Meehan||Rhett Oliver|
|Property acquisition, development and sale|