In this blog we unpack the infamous QLD Property Clause 6.2 (settlement extensions). 

Can you believe that there are still a whole lot of people that dont know exactly how this clause works ???

We explain everything you need to know - what it is, how it is a good thing for QLD property, and a few traps that could save your bacon!

Prefer to watch/listen? Click here to consume this content via YouTube!

Hi everybody - George Sourris, Empire Legal.

Today's topic: The infamous QLD clause 6.2 (settlement extensions) - UNPACKED! 

Can you believe it's been over 18 months since the "new" updates for REIQ contracts in Queensland came out?

The biggest change was easily the ability for a party to extend settlement unilaterally under what's been dubbed "the Clause 6.2 extension".

You'll find this clause in the latest version of the REIQ contracts from January 2022 onwards. Lots of people still don't really know what's going on here. Let's explore it and explain it in a couple of minutes.

The clause gives either a buyer or seller the option to extend settlement for up to five business days total from the original settlement date. 

This 6.2 clause can be used in a multitude of ways, totalling five business days. So it could be five business days straight out of the gates. It could be 1, 1, 1, 1, 1,  It could be 2, 2, 1 // 3, 2, etc. Basically, simple maths, no more than five.

The parties don't get five business days each. It's five business days total. For convenience, we have extracted the clause below:

In order to use 6.2, the party requesting it must send formal notice in writing prior to 4:00 PM on the scheduled settlement date. Note - 6.2 only applies to settlement. It's not applicable to finance or building and pest or any other condition.

Also note here that if the parties mutually agree to extend and 6.2 is not formally given as a notice, then it can still be used at a later stage.

For example, a one week extension is mutually agreed between the parties. That week goes by, they ask for another extension. Other side says NO - you can now activate 6.2 and you've got up to an extra five business days where the other side can't stop you. 

I like to call this the ace in the back pocket. So once you draw this card, the timer starts ticking, to a maximum of five business days. Once the card's drawn, the timer begins. So - it's a good thing for property law in Queensland.

It allows a deal to not fall over because of a last minute disaster; like a bank not being ready or funds not being cleared into an account on the morning of settlement. The main drawback here is that if removal trucks have been arranged, then at each party's individual cost, they're going to have to pay for that.

Okay - trap for new players. It's also important to ensure that an old version of the REIQ contract is not used. If it's an old version and clause 6.2 doesn't exist, it can't be used. 

Alternatively, for unique situations such as subject to sale matters, where it's imperative that the settlement deadline cannot be moved last minute, we can help delete clause 6.2 properly and draft the appropriate special conditions.

For example, if you need to move from the property your selling to your new property, you need the settlement date to be concrete so that your trucks etc are all lined up and there's no risk of the rug being pulled out from under you at 3:59PM. 

If drafted wrong, these situations can end up with one matter not settling or it might terminate or both. You could be temporarily homeless or have no access to either or both of your properties. 

We can help. If you guys need anything property related - Empire Legal.

If you have a topic you want me to talk about:  george@empirelegal.com.au - and you will get a shout out.

Thanks for reading.

---------------------------------------

We can help…

For simple, sunny, smooth sailing conveyancing - Empire Legal.

We look forward to continuing to help thousands of Queenslanders every year with their conveyancing!

Any questions? Want to know more? Get in contact with us via the below form or via info@empirelegal.com.au.

Note: all information is general in nature and as each matter is unique please contact our office for tailored advices: the above does not constitute legal advice.