Back to Basics - Top 10 "MUST KNOWS" for QLD Property Purchasers!

In this blog/video we discuss the Top 10 "MUST KNOWS" for QLD Property Purchasers!

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Hi everybody - George Sourris, Empire Legal.

Today's topic: Top 10 "MUST KNOWS" for QLD Property Purchasers!

Today, guys, I want to show you a cheat sheet I've created for the top 10 "must knows" for purchasers that are looking to buy in Queensland. We're going back to basics. All right, so the purchase of residential property in Queensland is a complex matter. There's over 18 different bits of legislation that govern property law in Queensland.

We are your guides. We know the law and we know what needs to happen to protect our Queensland buyers. All right, let's jump straight in.

Number 1 - time essential. Time is of the essence of the contract. This means that you must perform all of your obligations under the contract strictly by the due date.

For example, you must be ready, willing and able to settle on the settlement date. Otherwise, the seller may elect to terminate the contract and sue you for any losses suffered. You can lose your deposit. For most people, guys, that's their life savings.

Number 2 - deposits. The stakeholder, for a conveyancing matter, who should be the solicitor or real estate agent on the deal, will hold the deposit in trust until the completion, whereby it's paid to the seller, usually less the agent's commission. If you were to terminate for valid reasons in accordance with the contract, then the deposit would be refunded to you, the buyer.

If the deposit is not paid on time, the seller may be entitled to terminate the contract and forfeit the deposit and either sue you for damages or seek an order from the court that you specifically perform the contract and settle, or both.  You should provide the deposit holder with a copy of receipt for payment as soon as you have made that payment.

Number 3 - building and pest. If the contract is subject to satisfactory building and pest inspection reports, you must take all reasonable steps to obtain these reports. You must use a licensed building inspector, otherwise you're not able to terminate the contract on the grounds that you're not satisfied with the building and pest inspection.

If acting reasonably, you are not satisfied with the results of the building and pest reports, then you can elect to terminate the contract. Your other option is to waive the benefit of the condition, in which case the contract will no longer be subject to this condition, and you will be obliged to proceed with the contract.

In either of these cases, you do not have any recourse against the seller under this condition for issues which are raised in the Building and Pest reports. Pre-contract tip: discuss with your chosen inspector the time frame they suggest will be sufficient to arrange the inspection, compile the report and then give to you for review. Usually this is 7 or 14 days.

Number 4 - finance. If your contract is subject to finance, you must take reasonable steps to obtain finance approval by the approval date, from the lender listed on the contract. Taking reasonable steps to obtain finance approval includes making application as soon as possible after the contract is signed, and pursuing the application diligently.

You will need to notify the seller as to whether you have an approval on or before 5pm on the finance date. If you do not have written finance approval from your financier, you may seek an extension of time for finance. An extension is never guaranteed and there is a risk that your request may be declined.

Alternatively, you may elect to waive the benefit of the finance clause. However, waiving the condition means you're bound to complete the contract regardless of whether your financier approves finance or not. So, risky business.

If you do not notify the seller that the finance is approved or that the condition is waived by the deadline, then either party can terminate the contract. Pre-contract tip: check with your broker or banker before you sign the contract to discuss their suggested time frame for finance, commonly 14 or 21 days from signing.

Number 5 - cooling-off. Unless you've entered into the contract under auction conditions or have waived your cooling-off period rights, the contract will be subject to a 5 business day cooling-off period in which you may elect to terminate a contract for any reason. The cooling-off period starts on the day you receive from the seller or their agent a copy of the contract signed by both parties, or if that day is not a business day, the next business day.

If the seller signed the contract before you did, the cooling-off period starts on the day that you signed the contract and communicated your acceptance to the seller. If you are terminating pursuant to the cooling-off provisions, the seller may deduct a penalty of 0.25% of the purchase price from the deposit monies you have paid.

Number 6 - insurance / risk. The property is at your risk from 5pm on the first business day after the contract date. You should obtain adequate insurance to cover yourself as soon as possible. Despite this, the seller has an obligation until settlement to take reasonable steps to look after the property.

If the property is damaged between the contract date and the settlement date, e.g. fire or vandalism, you are still required to settle in accordance with the terms of the contract, unless it is destroyed or damaged as to be unfit for occupation. 

Number 7 - settlement extension notice. The REIQ standard contract terms provide both parties with a unilateral right to extend the settlement date by a period of up to five business days, without requiring agreement of the other party. A party that wishes to exercise this right may give notice of the settlement extension at any time up until 4pm on the settlement date.

Multiple extension notices can be given, provided the total time does not exceed five days from the original date.  Pre-contract tip: if you require a fixed date for settlement and would like to negotiate to remove this right for both yourself and the seller to extend up to five business days, please contact us to discuss and we can draft this special condition. This is particularly important for sale/purchase matters.

Number 8 - keys. The seller is obliged to deliver all keys to the property at completion. You should consider whether you'd like to collect the keys following settlement directly from the seller's agent  or from your solicitor's office and notify your solicitor accordingly.

The standard procedure is for the agent to hold the keys until settlement is confirmed.

Number 9 - buyer beware. In Queensland, the onus is on the buyer to undertake searches and satisfy itself in relation to the property.  There is limited obligation on the seller to tell you about the property or any of its defects or other issues, except for the limited contractual warranties and statutory disclosures.

Common practice is that the contracts are often signed first, and searches conducted post contract. This becomes a problem for buyers because the search results may not be identified in sufficient time for the buyer to identify issues and exercise any remedy against the seller under the contract. If you have any particular concerns, you should communicate this to your conveyancer before signing a contract.

For example, there's no rights on a standard contract to terminate for flooding. So you need to check in advance that you are satisfied that the property is not in a flood zone.

Number 10 - smoke alarms. Failure to install compliant smoke alarms is an offence under the Fire and Rescue Services Act of 1990. Under the REIQ standard terms, you're entitled to carry out an inspection for smoke alarms installed in the property, and if the seller has not complied with its requirements to install compliant smoke alarms in the property by the settlement date, you're entitled to an adjustment at settlement to the equivalent of 0.15% of the purchase price.

So, on a million dollar property, that's $1,500 as an adjustment in your favour, if it's found that they're not compliant. If the adjustment is not claimed by settlement, you're not able to make any claim against the seller in relation to the seller's failure to install compliant smoke alarms later, and it's your problem to bear. 

Okay guys, that's our top 10 tips for buyers in Queensland, hopefully you got something good out of this.

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

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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.