Recently announced amendments to the REIQ Residential Contracts by the Queensland Law Society introduce some significant changes to the entrenched property law position within Queensland. These amendments have the potential to significantly affect all parties.
The most significant change by far, is the introduction of a “settlement week” to the Standard Conditions, which allows either party to the contract a right to extend the settlement date, on numerous occasions, provided that the extended settlement date is no later than 5 Business Days from the original settlement date. Whilst this amendment purports to alleviate buyer difficulties and slow response times from their banks, other challenges will now arise which have the potential to financially impact all parties.
Parties to contemporaneous contracts need to pay particular attention to their own contract terms to ensure that the settlement dates align between all contracts, especially in the event of an extension right being exercised by a 3rd party. The risk being that a settlement date extension may result in one Contract being terminated, causing a domino effect for the balance of the contemporaneous contracts, especially during the crossover period using older or long-term contracts.
Buyers looking to move belongings into a property need to be aware of the potential for a settlement extension (of up to a week) and book removalists (or friends and family) accordingly so as to ensure that they have the flexibility to change the timing of removalists if settlement is extended.
A seller may likewise be affected, for example by needing to foot the bill for storage of chattels, short-term rental accommodation or legal fees if settlement is extended from the original date.
It should also be stressed that the extension right is “shared between all parties”, meaning if one party exercises the right to extend, the other party loses any right to extend they might have.
Whilst the above represent a few of the dilemmas which parties may come to face under the amended REIQ Contracts arriving next year, a number of easy fixes exist which can provide certainty or remove issues well before they arise, either before or after a contract is signed
For more information please do not hesitate to call the team at Property Law Partners to discuss any concerns with respect to your contract.
Keep an eye out for our next update on other REIQ Contract changes.
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