On 1 December 2014, the Property Occupations Act 2014 (Qld) and the Land Sales and Other Legislation Amendment Act 2014 (Qld) commenced which enacted various changes to pre-existing and off-the-plan residential property purchases.
The principal changes are:
1. Real Estate Agent Commissions
Perhaps the most interesting change to the industry is the deregulation of agent commissions. Under the previous legislation, the maximum commission a real estate agent could charge with respect to a purchase or sale of residential property was calculated as a percentage of the sale price stated in the Contract (5% of the first $18,000.00 and 2.5% of the remainder). For example, for a $400,000.00 property the maximum commission chargeable was $10,450.00 plus GST.
It was commonly accepted that the majority of agents charged the maximum rate as their standard fee. The removal of caps on commission is expected to increase the competition between agents, and allow consumers the opportunity to negotiate the commission payable (we note, however, that consumers always had the right to negotiate commissions with agents).
It remains to be seen whether the deregulation of commissions has the outcome desired by the Government, or whether some commissions may actually increase.
2. Warning Statement
From 1 December 2014, contracts entered into for sale of residential land will no longer have attached to the front of the document a ‘Warning Statement’ which contained information on Buyers cooling-off rights. There is now a paragraph which is required under the legislation to be inserted once immediately above where the Buyer executes the Contract.
That paragraph is required to say, “This 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.” The cooling-off right may now be waived or shortened by notice in writing from a Buyer to a Seller without any certification of advice having been given by a solicitor.
We note that the legislation stipulates those contracts to which cooling-off rights will not apply (please note in particular the word “may” in the first line of the prescribed cooling-off paragraph). Those contracts which will not be subject to a cooling-off period are:
- A contract formed on sale by auction;
- A contract formed by 5.00pm on the second business day after the subject property was passed in at auction with a registered bidder at the auction;
- A contract formed by exercise of an option under a contract, provided the parties to the contracts are the same;
- A contract where the Buyer is a publicly listed corporation, or a subsidiary of a publicly listed corporation;
- A contract if the Buyer is the State or a statutory body; or
- A contract where the Buyer is purchasing at least 3 lots at the same time, whether or not in the same contract document.
3. Body Corporate Information Sheet
From 1 December 2014, contracts entered into for the sale of community title scheme lots will no longer have attached to the front of the document an ‘Information Sheet’ which draws the Buyer’s attention to the fact that the lot is in a community titles scheme, and that by buying the lot the Buyer will become a member of the body corporate. In particular, the Information Sheet stated some of the Buyer’s common obligations such as making financial contribution towards body corporate administrative costs and the requirement to comply with the by-laws for the scheme.
The documents forming the Contract should still make a Buyer aware that the property which they are purchasing is contained in a community titles scheme. For instance, the usual Contract for residential sales is a document prepared by the REIQ and is entitled “Contract for Residential Lots in a Community Titles Scheme”, and the Seller is still required to provide a Disclosure Statement which sets out the financial contributions payable by a lot owner to the Body Corporate.
4. Off-the-Plan Disclosure
One of the better amendments that has been made, in our view, is that a Seller of ‘off-the-plan’ residential lots is now required to provide a cadastral survey (survey plan) of the property which the Buyer is purchasing. This provides greater certainty to Buyers who may not have previously known the dimensions, location or other particulars of the lot which they were going to purchase.
The solicitors at ABKJ are familiar with all of the above matters and can advise you further should you have any queries regarding conveyancing matters or body corporate law. Please do not hesitate to contact us to discuss how we can help you.