1 December 2014 ‐ Changes to Queensland Property Law 18/11/2014 The Property Agents and Motor Dealers Act (PAMDA) will be replaced by the Property Occupations Act on 1 December 2014. On that same date, changes will also be made to the Land Sales Act, Body Corporate and Community Management Act and the Building Units & Group Titles Act. Buyers, sellers, developers, agents and management rights operators will benefit from the red tape reduction which should make property transactions less complicated. If you are selling property, developing property, buying property or an agent letting property you need to know how the changes affect you. ............................................................................................................................................................. “The contract may be subject to a 5 business day statutory cooling off period. A termination penalty of 0.25% of the purchase price applies if the buyer terminates the contract during the statutory cooling off period. It is recommended the buyer obtain an independent property valuation and independent legal advice about the contract and his or her cooling off rights, before signing.”
Property Developers ¾
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Change Your Contract and Disclosure Statements ‐ You should change your current stock of ‘off the plan’ contracts and disclosure statements and contact your selling agents so that they are aware of the changes that take affect from 1 December. There is no transition period. Generally speaking, off the plan (proposed lot) contracts and disclosure statements compliant under the old legislation will not have a grace period where they are compliant under the new legislation. All contracts signed on or after 1 December must comply with the new law. If you use the REIQ form of contract a new version is due for release on or before 1 December. What Do I Need to Change? ‐ You should consider changing the following items in your contracts as from 1 December 2014 (depending on what you are selling):‐
if you are selling “residential property” under the Property Occupations Act (“the PO Act”) you must have a statement above where the buyer signs the contract, warning them about the cooling off period. The following wording should be included:‐
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You should remove the PAMD Form 30c Warning Statement and any Form 14 Body Corporate Information Sheet.
Remove references to the Property Agents and Motor Dealers Act and consider replacing them with references to Property Occupations Act.
Contracts for sale of lots or proposed lots in a community titles scheme are now governed by the Body Corporate and Community Management Act (BCCM Act) and not the Land Sales Act. In your contracts for sale of a lot in a
community titles scheme you should consider deleting references to the Land Sales Act where not relevant.
Remove provisions from your contract and disclosure statements that refer to acknowledgement of the PAMDA contract signing protocol.
Change your off the plan disclosure statements for the sale of lots in a community titles scheme so that they no longer refer to Land Sales Act disclosure.
Update your disclosure statements and disclosure plans for the sale of a proposed lot NOT in a community titles scheme (eg the sale of vacant land without a body corporate). Particular attention should be given to disclosing retaining walls on disclosure plans. Consult with your surveyor on this. Check to make sure the plans to be included in your disclosure statement for the sale of a proposed lot in a community titles scheme are updated and have the sunset date and new requirements for lot particulars. You should involve your surveyor and lawyer in this process. Revise any option deeds that you are considering. Disclosure and warning statement requirements have changed for option agreements. You will also need a new waiver of the cooling off period as the PAMD Form 32a no longer applies after 1 December. Call and Put Options will be affected. Consider what amounts (if any) you as a property developer receive by way of expressions of interest, deposits and option fees. Generally, all of these amounts should be paid to a trust account for the sale of proposed lots.
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Reconsider sunset dates for your off the plan community titles scheme contracts. If you have no sunset date then a period of 3½ years is implied by law. If you want to choose a date then you can specify a date up to 5½ years after the date of the contract. For a lot that is not in a community titles scheme then the sunset date still remains at 18 months.
If you sell house and land packages off the plan in a community titles scheme you may also need to disclose on your plans where the building is to be constructed and various other features. It does NOT apply to proposed lots not in a community titles scheme.
Make sure that the proposed settlement date of your off the plan contract can accommodate a potential 21 day disclosure period for further statements if you need to make further disclosure to buyers. You should consider including a right to extend the usual 14 clear day settlement period by up to 22 days to allow for a further disclosure statement to be given.
Buyer’s now have 21 days to decide whether they are materially prejudiced by further disclosure and give a notice to terminate.
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Product Disclosure Statement ‐ If you are using a Product Disclosure Statement in the sale of any property consider whether it should be updated.
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No Licence ‐ Property developers will no longer need a property developer’s licence.
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PAMD Form 27c Replaced by Form 8 ‐ Property Developers (as defined under the PO Act) who market their property are required to provide disclosure under a new Property Occupations Form 8. A developer qualifies as a property developer under the 6 properties per annum/15% test.
Agents ¾
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a contract formed because of the exercise of an option where the parties are the same as the parties to the option;
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a contract where the buyer is a publicly listed corporation or a subsidiary of a publicly listed corporation;
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a contract where the buyer is the State or statutory body;
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a contract where the buyer is purchasing at least 3 lots at the same time, whether or not in one contract.
What Do I Need to Change? ‐ Agents should consider the following as from 1 December:‐
When a buyer is signing a contract from 1 December 2014 for residential property, check to make sure the cooling off warning statement is written above where the buyer is to sign. Detach any PAMD Form 30c and BCCM Form 14 Warning Statements from the Contract before they are signed as they do not need to be attached to contracts signed by 1 December onwards. Obtain a new Property Occupations Form 6 to use for your appointment as agent.
Obtain a new Property Occupations Form 8 to provide disclosure to prospective buyers.
We will have the forms on our website for you to download.
Obtain the latest version of the REIQ/QLS form of Contract that should be issued by the REIQ on or before 1 December.
Check with your seller or developer client for an updated contract and disclosure statement to use from 1 December onwards. ¾
No Cap on Commission ‐ The cap on commissions payable for the sale, lease and letting of residential property has been abolished.
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Easier Auction Regime ‐ Previously, contracts for the sale of residential property sold “under the hammer” were the only form of contract exempt from the relevant provisions of PAMDA. Under the new Act a registered bidder can negotiate and sign a contract without the imposition of a cooling‐off period or the requirement for a warning statement for a period of 2 business days after the auction. The property must, however, be formally passed in at auction.
Obtain a form of waiver of cooling off period as the PAMD Form 32a will be redundant. Hickey Lawyers has a form of waiver of cooling off which you can obtain from us.
Familiarise yourself with the type of contracts for sale of residential property that are exempt from the Property Occupations Act. In general terms they are:‐
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Contract Exchange Easier ‐ Gone is the requirement to draw a buyer’s attention to the relevant contract and warning statement. This has been abolished under the new legislation.
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a contract formed on a sale by auction;
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a contract entered into by no later than 5.00pm on the second business day after the property was passed in at auction with a registered bidder for the auction;
Sole and Exclusive Agency – The maximum period for appointment of a sole or exclusive agent has been extended from 60 to 90 days.
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Preparation of an “income split” agency appointment will be much easier.
Management Rights Operators ¾
Termination Period Now 30 Days ‐ The minimum period of 90 days to terminate an appointment of agent has been reduced to 30 days.
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Not Required to Live On Site to get Residential Licence ‐ The requirement for resident letting agents to live on site to be eligible for a resident letting agent licence has been abolished. However, the resident letting agent must be in charge of the building complex that is its principal place of business if the body corporate has authorised the appointment of the resident letting agent.
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Still Hand Over Trust Account Records ‐ The requirement for a resident letting agent to provide its trust account records to the buyer of its management rights business at least 14 days before settlement has been carried over to the new legislation. It is important to note that if the letting agent fails to comply with the law, the new letting agent can avoid the contract. No Requirement for Owner to Agree and Initial Assignment Clause ‐ Under PAMDA, the letting agent was required to ensure that the property owner agreed to and initialled the PAMD Form 20a appointment indicating that the letting agent was entitled to assign the appointment to a buyer of its management rights. This has been removed. Instead the agent is required to give a notice to the property owner and the appointment is taken to be assigned if the notice is given with the relevant information.
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Letting Commissions/Management Commission Problem Gone ‐ The appointment of a letting agent will be significantly less complex because there is now no longer a cap on commission and it is expected that a more simple form of agency appointment document will be produced by the Office of Fair Trading.
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Not Required to Reside ‐ A resident letting agent is no longer required to reside in a complex to be able to obtain a resident letting agent’s licence. At the moment the new legislation does not require the consent of the body corporate for the resident agent to obtain a licence, or for that matter renew their licence.
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Licensed Director No Longer Needed ‐ A company does not need to have a director who is a licensed agent in order for the company to be licensed. Now it is sufficient if the company has a “person in charge” who holds a licence and is an employee.
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Code of Conduct Remains ‐ Regulations for the Property Occupations Act introduce the same terms as used under PAMDA for the Code of Conduct for Real Estate Agents and Letting Agents.
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Obtain New Form ‐ Obtain the new Property Occupations Form 6 and update the schedule if any that you would normally attach to a PAMD Form 20a.
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Product Disclosure Statement ‐ Update any product disclosure statement you may be using to refer to the new legislation and the ability to revoke a new appointment with 30 days notice.
Obtain Advice and Know Your Rights If you are a real estate agent, property developer, management rights operator or looking to enter into any of these industries you will need to obtain clear and relevant advice about how you will be affected by these changes. Contact Hickey lawyers If you have any questions about the Property Occupations Act and the transition from PAMDA, you should contact Joe Welch an Owner Partner of Hickey Lawyers who practices in the areas of Property Development, Management Rights, Agency Law and Body Corporate law.
Contact Details Hickey Lawyers P O Box 5559 GOLD COAST MC QLD 9726 Ph: 07 5574 1000 Email:
[email protected] No Substitute for Formal Advice You should obtain formal advice from Hickey Lawyers before acting on any of the issues referred to above. This is not intended to be a substitute for formal legal advice and this does not take into account your particular circumstances. The comments above are current as at the date of this document. The references to what you may need to change are not an exhaustive list of all relevant things you need to know or may need to change. By all means, contact Hickey Lawyers and we can provide you with advice tailored to your needs.
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