In this blog/video we discuss how a delay event, such as a natural disaster affects Queensland property transactions.

We discuss several special conditions we have drafted to safeguard property transactions, what you need to know regarding property insurance, what a delay event is, and more...

Considering Cyclone Alfred is set to hit the Queensland coast tonight, this is very important for anyone with a Queensland property under contract at the moment.

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Hi everybody - George Sourris, Empire Legal.

Today's topic: How a natural disaster affects property contracts in Queensland - what you need to know!

Guys, we've created this blog in the wake of Cyclone Alfred, so it's due to hit the Queensland coast from tonight, 6th of March, from midnight. Destructive winds, heavy rainfall, flash flooding, all forecasted to affect Queenslanders from the Sunshine Coast right into northern New South Wales. Last time a cyclone breached the Queensland coastline in South East Queensland was ex tropical cyclone Zoe in 1974, over 50 years ago. 

Okay, so the purpose of this blog is to explore what you need to know when it comes to buying or selling a property during a natural disaster and how it can impact your property.  In particular, I'm going to address insurance, a couple of special conditions that will help protect the transaction and the mechanics of a "Delay Event".

All right, let's start with insurance.

Queenslanders who already own a property should check their insurance policies. Not  all insurance companies automatically offer flood and storm cover as part of their policies. At the time of writing this content, I know, for example, RACQ offers insurance that covers natural disasters such as flood and storm. Even if a company does state that they cover these events, I strongly suggest you check out your insurer's Product Disclosure Statement (PDS), as there may be conditions or exemptions that apply.

The last thing you want is to think that you're going to have insurance over your property and then when it comes time to claim, there's a little asterisk that makes it invalid. That's absolutely not what you need in your life!

The main issue that occurs is the wait time for insurance coverage of a new policy.

For example, say you decide to get cover leading into a natural disaster. So I realise, whoops, I haven't got insurance. I ring up today. Well guys, fair chance there's going to be an embargo on new insurance policies during a natural disaster. I know a lot of insurance companies have put an embargo on new policies in Queensland at the moment. 

And also, even if there's not an embargo, usually, these natural disasters have a 72 hour delay specifically for natural disasters like flooding, cyclone, etc. So therefore, it's super important that you have an existing policy in play in advance.  

Alright, so how does this affect my property purchase or sale?

This topic has come up countless times in the past few days for our property law firm, as we're representing hundreds of clients every month through their conveyancing. The standard term of  the REIQ contract states that under 8.1, the property is at the buyer's risk from the next business day after the contract date. So, if theoretically you put a property under contract today, the day before or the day of a cyclone, you're going to have issues obtaining insurance over the property.

Once the next business day passes, as the buyer, the property is at your risk, and likely uninsurable until the natural disaster passes and the embargo for insurance is lifted.

Here at Empire Legal, we have created a special condition that allows a property to go under contract without the risk of the buyer not being able to obtain insurance during a natural disaster. We're more than happy to share this condition on any contract that where we're representing a buyer or seller just contact us to discuss further and we can share that with you.

A bit of a sneak peek into what we've drafted:

Say, 10 business days from the contract date the property remains at the sellers risk Then on the 11th business day the risk passes back to the buyer. This way, the property can be placed under contract and the buyer has the peace of mind knowing that they will have 10 business days to get insurance over the property, which should be well past the end of the natural disaster.

The exposure for the vendor is of course the risk that if a natural disaster occurs during that period of time, they will be liable from an insurance perspective. Naturally, we suggest all of our vendors keep insurance over the property regardless, as it is critical to safeguard such an expensive asset. We encourage all vendors that are considering accepting this special condition into the contract to read their insurance policy, and be comfortable with the terms of the coverage regarding any natural disaster during the time the property remains at their risk.

We've also drafted a separate special condition that allows either the seller or the buyer the ability to terminate the contract in the event a natural disaster strikes and damages the subject property, providing notice is given by a certain deadline. Beyond this, we can of course draft ad-hoc tailored conditions based on our client's particular needs, or the needs of that deal.

Guys, we're property law experts, we're here to help protect our clients, give them peace of mind, and of course keep their property transaction afloat during difficult times.

Alright, next is Delay Event.

Section 6.3 of the Standard Terms of an REIQ contract specifically defines a "Delay Event".

Examples of a Delay Event include, but are not limited to: cyclone, flood, tsunami, earthquake, bushfire, other act of nature, riot, war, terrorism act, or by direction of a government agency. A Delay Event is when a party is unable to perform a settlement obligation solely as a consequence of a Delay Event.

That means that if a party to the contract cannot settle solely due to a natural disaster (a cyclone for example), there will be be an opportunity for time to be extended under the contract to accommodate the Delay Event. In this instance, once the Delay Event ends, the affected Party gives notice that the Delay Event is over, and the settlement will occur 5 - 10 business days later.

This clause exists to protect the deal, keeping it on foot so the parties can deal with the Delay Event at hand and then get back to their property purchase or sale.  Navigating Delay Events requires tailored, technical, legal advice, and we of course are available to assist our clients with any queries during such a time.

For example, with Cyclone Alfred, our team are all working remotely, we're fully set up for that. So we're still giving legal advice, we still have settlements happening today, it's still full steam ahead.

Keeping in mind, obviously, little things like keeping water at home, some long life food, a generator to run essentials like a fridge, a TV and even a pedestal fan for these hot Queensland nights.

Guys, as a fellow Queenslander, if it's flooded, forget it. In the wake of Cyclone Alfred, stay safe out there, people. Cyclone Alfred would probably have passed by the time some people find this video. Keep in mind this blog can be applied to all natural disasters or Delay Events in this instance.

Please share this with anyone that may need to hear this message to safeguard their Queensland property from natural disasters. For anything Queensland property related, Empire Legal. Guys, it's all we do. We help people buy and sell property. Thousands of people across the Sunshine State every single year.

Everybody stay safe out there and if you need help with your Queensland property, please get in touch with us here at Empire Legal. So have a good one.  See you later guys. Stay safe. 

Guys, that's it for this week. Thank you so much. We've just hit 740 followers on our YouTube. As you know, our goal is 1,000. This is free content. Please share it with people. Subscribe. Helps us find more people to help. Obviously, Empire Legal, Conveyancing, Queensland wide.

It's all we do. We want to help you. If you've been listening to us for a while, but you haven't made contact, please do! We want to help people buy and sell homes and deliver QLD's best conveyancing experience. Thanks guys, we'll see you next week.

Subscribe to our YouTube and our blog. We want to get to 1,000 YouTube subscribers. We're only going to do that with your help. We're giving out this content for FREE to help you and your peers. Spread the good word of Empire Legal. We want to help everyone make property law in Queensland easy and smooth sailing. 

If you have any questions, you can email me: george@empirelegal.com.au. 

If this has added value, please share this blog / the YouTube video with a friend. 

Thanks for reading everybody. See you on the next one.

Ladies and gentlemen, please keep in mind that all advice is general in nature and does not constitute legal advice. This is authorised by George Sourris, Empire Legal, Brisbane, Queensland, Australia.

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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.