In brief
New legislation that deals with property transactions in Queensland will have major implications on the sale process of residential property and the licensing of agents. Partner Alister Fitzgerald and Senior Associate Annabelle Aland report on the main changes.
Background
The Property Occupations Act 2013 (Qld) (the Act), which effectively replaces the Property Agents and Motor Dealers Act 2000 (Qld) (the PAMDA) has now been passed and should commence in the next few months. The Act will remove some of the more restrictive elements of the current legislation and will help streamline the property transaction process.
Under the transitional provisions, contracts entered into prior to the Act coming into effect will still be governed by the provisions of PAMDA. For example, if a buyer has a right to terminate a contract under the PAMDA, they will still have that right.
Key amendments
Abolition for Forms 30c and Form 14
The warning statement (Form 30C) and the BCCM Information Sheet (Form 14) have effectively been abolished. They are replaced by the requirement to insert, immediately above where the buyer signs the contract, particular nominated words. If the required words are not used, there is no right to terminate the contract. However, the seller or the seller's agents commits an offence and is liable for a penalty of up to $22,000.
Cooling-off period
There is no substantive changes to the five business day cooling-off period.
Residential property
The definition of 'Residential Property', which triggers the cooling-off period and related requirements, has been shortened to refer to property that is used or intended to be used for residential purposes. This, at least, removes the need to refer to complicated planning schemes to determine whether property is residential property. However, the test for 'intended to be used' will no doubt be litigated. The rule is, when in doubt, assume property is residential property.
Property developer licences
Property developer/property developer director's licences have been abolished. However, property developers still need to give certain disclosure information in an approved form. This is generally about benefits derived from the sale.
Licensed director
A company will be able to hold a real estate agent's licence provided it engages a licensed real estate agent to be in charge of the business there is no longer the need to have a licensed real estate agent as a director of the company to enable the company to hold a real estate licence.
No maximum commission
At long last maximum commission rates on the residential property transactions have been abolished.
Vacant land notices
Agents will no longer be required to give buyers of non-residential vacant land a notice saying the land cannot be used for residential purposes.
Sophisticated parties (residential property)
The residential property sales requirements (eg. cooling off period etc) will not apply where the buyer is:
- a publicly listed corporation or a subsidiary of a publicly listed corporation;
- the State or a statutory body;
- the buyer is purchasing at least three lots of the same time, whether or not in the one contract.
Sophisticated party (non-residential property)
Where non-residential property is sold, the provisions of the Act will not apply if:
- the property the subject of the transaction has a gross floor area or estimated value exceeding that prescribed by regulation (currently no regulation has been gazetted); or
- each party to the transaction owns property (excluding the property the subject of the transaction) that has a gross floor area or estimated value exceeding that prescribed by regulation.
This applies both in sale and letting circumstances. In practice it will remove the need to use approved forms (eg agency appointment forms) in such transactions.
Auction changes
Under PAMDA, the cooling off provisions benefiting residential buyers did not apply to properties sold by auction. That exemption has now been extended under the Act in respect of contracts entered into by 5pm on the second clear business day after the property is passed in at auction, provided the buyer was a registered bidder. Care will need to be taken to ensure the registered bidder (and not a related entity) is the buyer.
What does it mean for developers
- Residential contracts will need to be updated to include the prescribed words above where the buyer signs the contract and the Form 30c and Form 14 removed.
- Commission in regard to residential sales can be freely negotiated (with no maximum).
- Any property developer/property developer director licences can be cancelled but developers will still need to give a buyer appropriate disclosure for selling their own product.
- Care will still need to be taken to consider whether, in a particular transaction, the property is residential property (unless the sophisticated parties provisions can be relied upon).
Conclusion
The Act represents a huge step forward in streamlining property transactions. In particular, it removes the over-restrictive previous requirements of PAMDA which gave many buyers unmeritorious grounds on which to terminate their contracts. The State Government is to be congratulated.