CPPDSM4008A Manual Part 2 v15.1 December 2014

7/24/2019 CPPDSM4008A Manual Part 2 v15.1 December 2014

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Identify legal and ethical

requirements of property sales

to complete agency work

CPPDSM4008A Part 2


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CPPDSM4008A - Part 2

Identify legal and ethicalrequirements of property sales to

complete agency work

Version Number: 15.1Effective June 2015

These materials were prepared by The Real Estate Institute of Queensland. 2015 The Real Estate Institute of Queensland

This work is copyright. Apart from any use permitted under the Copyright legislation, no partmay be reproduced without prior written permission from REIQ.

Disclaimer

No part of this material may be regarded or relied upon as legal advice. Although reasonable care has been taken in thepreparation of this material, recipients:

must not alter their position or refrain from doing so in reliance upon this material; and should seek independent legal advice with respect to the matters traversed in this material.

The Real Estate Institute of Queensland Limited (REIQ) does not accept or undertake any duty of care relating to thismaterial. Further, REIQ shall not be liable in any respect to any recipient of this material for:

(a) any loss of profit, loss of goodwill, loss of production, loss of opportunity, business interruption, loss of revenue, lossof contract, loss of anticipated savings or revenue, loss or corruption of data or loss of privacy of communications; or

(b) any consequential, special, indirect, exemplary or punitive damages, of any nature, arising out of or in connectionwith this material, even if such loss or damage was reasonably foreseeable or the recipient had informed the REIQof the possibility of the recipient incurring that loss or damage.

This material has been prepared based on information available at the time of its publication. REIQ does not represent orwarrant that the material is error free, complete or accurate.


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CPPDSM4008A Part 2 2 REIQ v15.1 December 2014

CONTENTS

UNIT 16PREPARING AND DELIVERING RESIDENTIAL CONTRACTS 12

[16.1] Sequence of signing documents by buyer 12

[16.2] Directing the buyers attention 12

[16.3] Sending documents to the buyer by email or fax 12

UNIT 17TERMS OF CONTRACT 12

[17.1] Requisitions on title 13

[17.2] Acceptance of title 13

[17.3] Defects in title 14

[17.4] Terms of the contract 15

[17.4.1] Improvements [Clause 1.1 (2) (q)] 15

[17.4.2] Investment of deposit (Clause 2.3) 15

[17.4.3] Interest on deposit (Clause 2.4) 15

[17.4.4] Land tax [Clause 2.6 (4)] 15[18.4.5] Requirements of authorities [Clause 7.6 (2)] 15

[17.4.6] Property adversely affected (Clause 7.7) 16

[17.4.7] Insurance (Clause 8.1) 16

[17.4.8] Access (Clause 8.2) 16

[17.4.9] Foreign ownership (Clause 10.2) 16

[17.5] Disclosure 17

[17.6] Learning activity unit 18 17

PART 6: COMPLETION GUIDE FOR CONTRACTS 19

UNIT 18THE REIQ CONTRACT FOR HOUSES AND RESIDENTIAL LAND 19

[18.1] Contract format 19

[18.2] How to fill out the reference schedule 19

[18.3] A guide for completing the Contract for Houses and Land 20

[18.3.1] Contract date 20

[18.3.2] Agent 20

[18.3.3] Parties 20

[18.3.4] Property 21

[18.3.5] Title reference 21

[18.3.6] Land area 21

[18.3.7] Present use 22

[18.3.8] Local government 22

[18.3.9] Excluded fixtures 22

[18.3.10] Included chattels 22

[18.4] Matters affecting property 22

[18.5] Price 23

[18.5.1] Deposit holder 23

[18.5.2] Purchase price 23

[18.5.3] Deposit 23

[18.5.4] Default interest rate 23

[18.5.5] Finance 23[18.5.6] Finance amount 24

[18.5.7] Financier 24

[18.5.8] Finance date 24


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REIQ v15.1 December 2014 3 CPPDSM4008A Part 2

[18.6] Buyers inspection 24

[18.6.1] Building inspection and pest control inspection 24

[18.6.1] Title encumbrances 25

[18.6.2] Tenancies 25

[18.6.3] Vacant possession 25

[18.6.4] Managing agent 26

[18.7] Pool safety 26

[18.7.2] Electrical safety switches 32

[18.7.3] Smoke alarms 32

[18.7.3] Neighbour Disputes 33

[18.8] Settlement date 33

[18.8.1] Place for settlement 33

[18.9] Signing 33

[18.9.1] Witness 34

[18.9.2] Initialling 34

[18.10] Contract special conditions 34[18.11] Dates 35

[18.11.1] Dates where possible should always be actual dates. 35

[18.11.2] Dates for finance (should be a business day) 35

[18.11.3] Building and pest inspection dates 35

[18.11.4] Pool Safety 36

[18.11.5] Dates for settlement 36

[18.11.6] Time limits 37

[18.11.7] Calculating contract dates 37

[18.12] Deposits 38

[18.13] Definitions 38

[18.14] Contract time line example 39


UNIT 19CONTRACTS FOR RESIDENTIAL LOTS 59

[19.1] Community Titles Scheme 59

[19.2] Common community title terminology 60

[19.2.1] Strata title 60

[19.2.2] Group title 60

[19.2.3] Standard format lots 60

[19.2.4] Building format lots 60

[19.2.5] Volumetric and layered schemes 60

[19.2.6] Community title scheme (CTS) 60

[19.2.7] Community management statement (CMS) 61

[19.2.8] Body corporate 61

[19.2.9] Body corporate manager 61

[19.2.10] Body corporate secretary 61

[19.2.11] Regulation module 61

[19.2.12] Administration fund 62

[19.2.13] Sinking fund 62

[19.2.14] Lot entitlement 62

[19.3] Sales documentation for community title lots 62

[19.3.1] BCCM Disclosure Statement 63

[19.3.2] BCCM Section 206 Disclosure Statement 63

[19.4] Selling units off the plan 63


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[19.5] Sellers disclosure (implied warranties) 64

[19.6] Sellers and agents 65

[19.7] Contract documentation for the sale of community title lots 66

[19.7.1] Application 66

[19.7.2] Required information 66

[19.7.3] Format 66

[19.7.4] Section 206 Disclosure Statement 67

[19.7.5] Section 206 Disclosure Statement information 67

[19.7.6] Completing the REIQ Contract of Sale for Residential Lots in a CommunityTitles Scheme 68

[19.7.7] The reference schedule 68

[19.7.8] Contribution schedule lot entitlements 73

[19.7.9] Additional body corporate information 73

[19.8] Sellers disclosure (contract warranties) 75

[19.9] Checklist for community titles schemes contracts 75


UNIT 20PARTICULAR CIRCUMSTANCES AFFECTING THE CONTRACT 96

[20.1] Blocks of flats 96

[20.2] Company title schemes 96

[20.3] Property sold by public auction 96

[20.4] Special conditions 97

[20.5] Commonly used special conditions 97

[20.6] Wording of special conditions 97

[20.7] Seller (vendor) finance 98

[20.8] Land Sales Act 1984 98

[20.9] Off-the-plan sales 99

[20.9.1] Step 1 - Survey the land and draw the plan 99

[20.9.2] Step 2 - Lodge the plan with council 99

[20.9.3] Step 3 - Land can be promoted for sale 99

[20.9.4] Step 4 - Sellers disclosures 100

[20.9.5] Step 5 - Significant variation notice 100

[20.9.6] Step 6 - Delivery of plan 100

[20.9.7] Step 7 - Finalisation of sale 101


APPENDIX A - LEARNING ACTIVITY ANSWERS 102

FORMS INCLUDED IN THIS MANUAL

Contract for Houses and Residential Land

Disclosure Statement

Contract for Residential Lots in a Community Titles Scheme


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Unit descriptor

This unit of competency specifies the outcomes required to meet the core legal and ethicalrequirements associated with property sales. This includes awareness of the legislation relating toproperty sales, the role and responsibility of agency personnel in property sales, the administration ofsales transactions and the completion of sales documentation.

The unit may form part of the licensing requirements for persons engaged in real estate activities inthose States and Territories where these are regulated activities.

Application of the unit

This unit of competency supports the work of licensed real estate agents and real estaterepresentatives involved in property sales. It addresses the requirements for licensed real estateagents and real estate representatives to be able to identify and explain relevant legislation, roles,responsibility and documentation.

ELEMENT PERFORMANCE CRITERIA1 Develop knowledge ofproperty sales

1.1 Types and characteristics of land tenure systemsare identifiedin line with legislation.

1.2 Legislation regulating the sale of properties is identified in linewith agency practice.

1.3 Information provided on the Certificate of Titleis checked foraccuracy against the agency agreement.

1.4 Types of property ownershipare identified in line withlegislation.

1.5 Legal requirements relating to the sale of property are identified

and interpreted in line with legislation and agency requirements.1.6 Requirements of ethical and conduct standards and consumer

protection and privacy legislation in relation to the sale ofproperty are identified in line with legislative requirements andagency practice.

2 Develop knowledge ofsales process

2.1 Need for demonstrating effective communication strategiesinestablishing rapport with clients, determining client needs,providing accurate advice, addressing client concerns anddealing with conflict is identified in line with agency practice.

2.2 Listingopportunities are identified and assessed in the contextof legislative requirements and agency practice.

2.3 Methods of selling propertyare identified and assessed in thecontext of legislative requirements and agency practice.

2.4 Sale authority agreementsare identified, completed and storedin line with legislative requirements and agency practice.

2.5 Strategies for marketing property are identified and assessed inthe context of legislative requirements and agency practice.

2.6 Purpose and terms of statutory statements required to beprepared by sellersfor the sale of property and businesses areidentified and interpreted in the context of legislativerequirements and agency practice.

2.7 Contractual documentsrelating to the sale of property are

identified, interpreted, completed and stored in line withlegislative requirements and agency practice.

2.8 Process for settling the sale of property is identified in thecontext of legislative requirements and agency practice.


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2.9 Processes for receipt, recording, banking and release of depositmoneys are identified in the context of legislative requirementsand agency practice.

3 Identify roles andresponsibilities of salespersonnel.

3.1 Relationship between salesperson and agency principal isidentified in the context of legislative requirements and agencypractice.

3.2 Roles and responsibilities of agent in sale of propertyincluding general disclosure requirements are identified,interpreted and assessed in the context of legislativerequirements and agency practice.

3.3 Restrictions on agents purchasing propertyand sanctions forviolations of restrictions are identified, interpreted and compliedwith in line with legislative requirements and agency practice.

3.4 Controls and sanctions on secret commissions are identified inthe context of legislative requirements and agency practice.

3.5 Entitlements and commissions for agents are identified andcalculated in the context of legislative requirements and agency

practice.

Required skills and knowledge

This section describes the essential skills and knowledge and their level, required for this unit.

Required skills

Ability to communicate with and relate to a range of people from diverse social, economic andcultural backgrounds and with varying physical and mental abilities

Analytical skills to interpret documents such as legislation, regulations, contracts, contract notes,sale authority documents and certificates of title

Computing skills to access agency and resource databases, use standard software packages,send and receive emails, access the internet and web pages, and complete and lodge standarddocuments online

Decision making and problem solving skills to analyse situations and make decisions associatedwith the sale of property

Literacy skills to access and interpret a variety of texts, including contracts; prepare generalinformation and papers; prepare formal and informal letters, reports and applications; andcomplete prescribed forms

Negotiation skills required for interacting with sellers and buyers

Numeracy skills to calculate and interpret data, such as deposits, entitlements and commissions

Planning, organising and scheduling skills to undertake work-related tasks, such as preparingcorrespondence, organising deposits and arranging property inspections

Research skills to identify and locate documents and information relating to the sale of property

Risk management skills to identify risks associated with discussing sale and purchase options withsellers and buyers

Self-management skills to organise own work, deliver quality customer service and effectivelymanage competing demands

Teamwork skills to work effectively in and promote communication between sales, propertymanagement and administrative teams in an agency environment

Verbal communication skills required for face-to-face communication with real estate sellers andbuyers.


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Required knowledge and understanding

Agent entitlements and commissions

Contract law in the real estate industry, including agent liability for breach of contract andnegligence

Ethical and conduct standards relevant to licensed real estate agents and real estaterepresentatives

Key principles of consumer protection and privacy legislation

Key principles and terminology of property law

Legislative limitations on agency practice

Offences and penalties under legislation

Relevant federal, and state or territory legislation and local government regulations relating to:

Anti-discrimination and equal employment opportunity

Consumer protection, fair trading and trade practices

Employment and industrial relations Financial services

OHS

Privacy

Property sales

Risk and risk management strategies

Roles and responsibilities of estate agency personnel in relation to the sale of property

Sales process, including ways of obtaining listings, methods of selling property, strategiesfor marketing property, and the process for settling the sale of property

Trust funds and legislative controls on trust funds.

Range statement

The range statement relates to the unit of competency as a whole. It allows for different workenvironments and situations that may affect performance. Bold i ta l ic isedwording in the performancecriteria is detailed below.

Land tenure systemsmayinclude:

Freehold or fee simple

Leasehold.

Legis lat ionmay include: Relevant federal, and state or territory legislation and localgovernment regulations relating to:

Anti-discrimination and equal employment opportunity

Consumer protection, fair trading and trade practices

Employment and industrial relations

Financial services

OHS

Privacy

Property sales.


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Certif icate of Tit lemayinclude:

A plan of the land

Details of caveats over the land, such as easements andcovenants

Lot, plan and subdivision

Names of registered proprietors

Names of the mortgagees and dates of registration anddischarge

Volume and folio numbers.

Types of proper ty

ownership may include:

Company ownership

Joint tenants

Sole owner

Tenants in common.

Effect ive communicat ionstrategies may include:

Active listening

Being non-judgmental

Exploring problems

Expressing an individual perspective

Providing sufficient time for questions and responses

Providing summarising and reflective responses in conflictsituations

Using appropriate words, behaviour and posture

Using clarifying and summarising questions

Using clear and concise language Using culturally appropriate communication

Using plain English

Using verbal and non-verbal communication.

List ings may include: Advertising

After-sales letters

Builders and developers

Callers to the office

Conjunctions and multiple listings Farming

Open for inspections

Owner boards and seller advertisements

Recommendations

Telemarketing.


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Methods of sel l ing

proper ty may include:

Alternative sales methods, such as set sales

Auction

Conjunctional sales

Private sale or treaty

Sale by tender Seller sale.

Sale authority agreement s

may include:

Auction authority

Exclusive sale authority

General sale authority

Sole sale authority,

Statutory statements

required to be prepared b y

sellers may include:

Additional sellers statement

Sellers statement

Statement for the sale of a small business.

Contractual docum ents

may include:

Contract note

Contract of sale of real estate

Finance statement to buyers

Prescribed or permitted forms used by agents in property sales

Release of deposit moneys.

Roles and respon sib i l i t ies

of agent in sale of proper tymay include:

Agreement to sell

Communication

Completing contract documents

Ethical and conduct standards

General disclosure requirements

Legal responsibility

Listing

Marketing

Negotiating sale terms and conditions

Office procedures for presenting the property

Prospecting

Providing information to buyer

Sale settlement.

Restr ic t ions o n agents

purchasing proper ty mayinclude:

Restrictions on licensed real estate agents and real estaterepresentatives

Restrictions on support staff

Restrictions on the spouse or domestic partner, parent, brother,sister or child of licensed real estate agents or real estaterepresentatives.


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Evidence guide

The evidence guide provides advice on assessment and must be read in conjunction with theperformance criteria, required skills and knowledge, the range statement and the AssessmentGuidelines for this Training Package.

Overview of assessment

This unit of competency could be assessed through case studies, demonstrations, practical exercisesand targeted written (including alternative formats where necessary) or verbal questioning relating tothe legal and ethical requirements of property sales. The case studies, demonstration and questioningwould include collecting evidence of the candidates knowledge and application of ethical standardsand relevant federal, and state or territory legislation and regulations. This assessment may be carriedout in a simulated or workplace environment.

Critical aspects for assessment and evidence required to demonstrate competency in this unit

A person who demonstrates competency in this unit must be able to provide evidence of:

Ability to communicate effectively and accurately with clients

Application and knowledge of ethical and conduct standards and key principles of consumerprotection and privacy in relation to the sale of property

Application and knowledge of the sales process, including ways of obtaining listings, methods ofselling property, strategies for marketing property, and the process for settling the sale of property

Application and knowledge of accurately completing statutory and agency sales documentation,including authorities and contracts

Application and knowledge of the legislation and regulatory framework relevant to the sale ofproperty

Application and knowledge of the role and responsibilities of the agent in the sale of property,including the legislative restrictions on agents purchasing property and the controls and sanctionsassociated with secret commissions.

Context of and specific resources for assessment

Resource implications for assessment include:

Access to suitable simulated or real opportunities and resources to demonstrate competence

Assessment instruments that may include personal planner and assessment record book

Access to a registered provider of assessment services.

Where applicable, physical resources should include equipment modified for people with disabilities.Access must be provided to appropriate learning and/or assessment support when required.Assessment processes and techniques must be culturally appropriate, and appropriate to thelanguage and literacy capacity of the candidate and the work being performed.

Validity and sufficiency of evidence require that:

Competency will need to be demonstrated over a period of time reflecting the scope of the roleand the practical requirements of the workplace

Where the assessment is part of a structured learning experience the evidence collected must

relate to a number of performances assessed at different points in time and separated by furtherlearning and practice with a decision of competence only taken at the point when the assessor hascomplete confidence in the persons competence

All assessment that is part of a structured learning experience must include a combination ofdirect, indirect and supplementary evidence


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Where assessment is for the purpose of recognition (RCC/RPL), the evidence provided will needto be current and show that it represents competency demonstrated over a period of time

Assessment can be through simulated project-based activity and must include evidence relating toeach of the elements in this unit.

In all cases where practical assessment is used it will be combined with targeted questioning to

assess the underpinning knowledge. Questioning will be undertaken in such a manner as isappropriate to the language and literacy levels of the candidate and any cultural issues that may affectresponses to the questions, and will reflect the requirements of the competency and the work beingperformed.


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UNIT 16PREPARING AND DELIVERING RESIDENTIAL CONTRACTS

[16.1] Sequence of signing documents by buyer

It is important for an agent to clearly identify to buyers what documents are required to besigned and also in the order that they should be signed.

The buyer must sign the Property Occupations Form 8 Disclosure, Body Corporate Section206 Disclosure Statement (if a Community Titles Scheme sale) and any other disclosuresfirst.

[16.2] Directing the buyers attention

It is recommended agents must direct the buyers attention to the cooling off period provision,Section 206 Disclosure Statement (if a unit sale) and proposed relevant contract at leastonce. This would usually be done the first time the documents are presented to the buyer.

This can be done verbally or in writing although it is strongly recommended that this be donein writing to ensure that there is a record of the direction to the buyer.

A buyer will have a right of termination (exercisable within 90 days of the contract or by thesettlement date, whichever is the earlier) if the buyer is not given a clear statement directingtheir attention to the above documents at the time of giving the proposed relevant contract tothe buyer.

[16.3] Sending documents to the buyer by email or fax

In accordance with the Electronics Transactions Act 2001 (Queensland) it is a statutoryrequirement to have the consent of a buyer and seller before sending any documentation byelectronic means. The agent should ensure they obtain written consent of all parties that theyagree to the use of facsimile or email as a method of communication for the transaction.

A best practice document Consent to electronic communication is available throughRealworks for this purpose.

UNIT 17TERMS OF CONTRACT

Before selling a property, the seller must be able to prove a good and sound title to theprospective buyer and is required to produce a title before the sale of the property. Thismeans the seller must prove registered ownership of the property for sale. When a propertyis offered for sale in the Torrens System, it is a simple matter of showing the prospectivebuyer the certificate of title. This document can be checked by obtaining a copy from theTittles Office for a fee. Agents should ensure the persons recorded on the title are thepersons with whom they are dealing.

Whenever a prospective buyer has a query concerning proof of title, the agent should refer tothe title, and advise the buyer that legal advice should be obtained from a qualified lawyer.

The certificate of title (title deed) is a document that provides proof of ownership. The

certificate of title today is simply a computerised transaction notice. It is always a good ideato sight a copy of the title search as well as undertake a title search to gather as muchinformation as possible about a property.


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The certificate of title number, always located on the top right hand side of the title document,is essential for the agent to use when completing all listing and selling documentation. Thetitle deed is an example of a Transaction Notification. This is the official computeriseddocument that has replaced the old deeds.

[17.1] Requisitions on title

As a result of changes in conveyancing practice, the practice of requiring requisitions on title,pursuant to section 156 of the Land Title Act 1994 (Queensland) in the Queenslandconveyancing process is now uncommon.

The practice of requisitions on title was replaced by sellers warranties as to title in thecontract document. This means that a seller and their agent must be particularly vigilantwhen preparing contracts to ensure that the information contained within the contract isaccurate at the date of preparation. It is essential that an agent conducts a title search priorto the preparation of the contract Remember your obligations as per Section 19 and 20 of theProperty Occupations Regulation 2014.

Property Occupations Regulation 2014

Part 5 Conduct standards

Section 19 Finding out or verifying property ownership and description

(1) Before auctioning property, an auctioneer appointed to sell the property must take reasonable steps to

find out or verify the ownership of the property and property description.

(2) Before listing property for sale, lease or exchange, a real estate agent or real estate salesperson must

take reasonable steps to find out or verify the ownership of the property and property description.

Property Occupations Regulation 2014

Part 5 Conduct standards

Section 20 Finding out or verifying facts material to the sale of property(1) An auctioneer appointed to sell property must take reasonable steps to find out or verify the facts

material to the sale that a prudent auctioneer would have found out or verified to avoid error,

omission, exaggeration or misrepresentation.

(2) The steps must be taken before the auctioneer auctions the property and afterwards as the occasion

arises.

(3) A real estate agent appointed to sell, purchase, exchange or lease property must take reasonable steps

to find out or verify the facts material to the sale, purchase, exchange or lease that a prudent real estate

agent would have found out or verified to avoid error, omission, exaggeration or misrepresentation.

(4) The steps mentioned in subsection (3) must be taken before the agent lists the property and afterwards

as the occasion arises.

There is a requirement on the seller and the agent to ensure that all relevant matters thatmay adversely affect the property are revealed either under Encumbrances or in the specialconditions of a contract.

If the defect, or doubt, not disclosed by the contract is one which is known, or ought to havebeen known, to the seller at the date of the contract, the buyer shall in addition be entitled torecover the purchasers expenses of investigating the title.

[17.2] Acceptance of title

In some other states, the acceptance of the sellers title by the buyer is an important step inthe conveyancing process. By accepting title, the buyer waives the right to objections inrelation to any defects in the title. This situation differs in Queensland, where acceptance of


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title only takes place at settlement. Queensland does not use the system of exchangingcontracts, thus giving a buyer no opportunity to object to title prior to entering the contract.

The contract documents signed by the buyer and submitted to the seller is an offer topurchase. Upon acceptance of the offer by the seller a binding contract is formed, which isenforceable after the cooling-period ceases.

The legal obligations upon the seller to make disclosure of matters affecting the propertycauses agents to exercise caution and not become party to any false or incompletedisclosures. It is the sellers duty to make good title at settlement.

[17.3] Defects in title

The concept of defects in title comes from the historical process of proving title through aseries of transactions, as in Old System Title. In the Torrens System where title is proved byRegistration of Title, defects in title will prevent the seller passing a good title to the buyer.These defects include any lack of proper registration of a seller as the owner of the land, orsome forms of encumbrance, particularly where the seller cannot cause them to be removed,such as a caveat.

When searching the title the agent must be vigilant for encumbrances that may cause abuyer to reject the property. These encumbrances could be easements, caveats, leases,covenants, or local authority orders; such as a demolition order, or vegetation protectionorder, that the buyer inherits at settlement.

If these defects are not disclosed, then it is assumed that the buyer is acquiring a title freefrom encumbrance.

Sellers of property have certain duties under a contract of sale to disclose material defects inthe property to the buyer. Clause 7 of the REIQ Contract for Houses and Land (studied laterin this unit) - Matters Affecting the Property specify the sellers warranties with respect to theproperty under contract; namely:

Clause 7.1 Title

Clause 7.2 Encumbrances

Clause 7.3 Requisitions

Clause 7.4 Sellers Warranties

Clause 7.5 Survey and Mistake

Clause 7.6 Requirements of Authorities

Clause 7.7 Property Adversely Affected

Clause 7.8 Dividing Fences

These defects may be:

Patent defects, which are those that are obvious and open to scrutiny on inspection ofthe property, e.g. power lines running over the property or a driveway to rear block.

Latent defects, which are those that the buyer cannot normally discover upon an

inspection of the property, for example, an underground drainage easement. Upondiscovery of certain defects, a buyer may terminate the contract. (Refer to Clause 7.7 -Property Adversely Affected in the Contract for Houses and Land for further examples).

Unlawful use. If at the time a contract is signed the present use is not lawful and thatsituation has not been disclosed, the buyer may terminate by notice to the seller up


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until TWO business days prior to settlement. If the agent discloses the correct presentuse in the contract of sale this will be sufficient disclosure.

However, if the buyer does not give notice or objection to that defect the buyer is treated ashaving accepted the property with all its problems.

[17.4] Terms of the contract

The terms of the contract are the contents which form the Standard Conditions of the sale.

[17.4.1] Improvements [Clause 1.1 (2) (q)]

All structures on the land and other permanently fixed items are included in the sale, such asstoves, hot water systems, fixed carpets, curtains, blinds and their fittings, clothes lines,satellite dishes, television antennae and in ground plants. Improvements do not include thereserved items named in the Reference Schedule under excluded fixtures.

[17.4.2] Investment of deposit (Clause 2.3)

Either the seller or the buyer can instruct the deposit holder to invest the deposit. However,Section 17 of the Agents Financial Administration Act 2014 (AFAA) prevents a real estateagent who is the deposit holder from investing the deposit unless the settlement date is morethan 60 days after the contract date. The deposit can be invested with a bank, buildingsociety or credit union, in a special investment account.

[17.4.3] Interest on deposit (Clause 2.4)

If the contract settles, the seller gets the interest. If the contract is terminated without defaultby the buyer, the buyer receives the interest. If the contract is terminated because the buyerdefaults, the seller gets the interest. Sometimes this clause can be varied by a specialcondition so that interest can be apportioned by agreement between the parties.

[17.4.4] Land tax [Clause 2.6 (4)]

If the seller is a company, delete on line three in this clause one natural person. Land ta x isan annual tax paid by the owners of real estate who are considered to have a beneficial

ownership of land.

That is, they are deriving some indirect benefit from the ownership other than a principalplace of residence. The rate payable is determined by the assessed valuation.

[18.4.5] Requirements of authorities [Clause 7.6 (2)]

Where an authority, such as a local council, requires work to be done on the property, theseller must complete the work if the notice is issued before the contract date. Alternatively, itbecomes the buyers responsibility if the notice is issued after the contract date. The buyermay direct the seller not to carry out the work if the notice is issued after the contract date

provided the buyer indemnifies the seller against any liability for not carrying out the work.

The buyer may terminate the contract if, at the date of the contract there is an outstandingnotice under the Building Act 1975.[Clause 7.6 (3)] the seller warrants [Clause 7.4 (2)] thatthere is no such notice.


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Although the contract does not refer to this issue, the Building Actobliges sellers to notifybuyers where building work has been carried out by unlicensed builders (e.g. owner builder)within the six (6) years prior to contract. If this is not done, the seller may be liable.

[17.4.6] Property adversely affected (Clause 7.7)

The buyer may terminate the contract if, at the date of the contract:

The present use was unlawful under the town plan

The land was affected by a road or railway widening proposal

Access or any service passes unlawfully through other land

A resumption notice has been issued

The land is contaminated

The land is affected by the provisions of the Queensland Heritage Act 1992

(Queensland) or the World Heritage List

There is an undisclosed easement, covenant or caveat

If the buyer wishes to terminate the contract they must give notice in writing to the seller nolater two business days before the settlement date.

[17.4.7] Insurance (Clause 8.1)

The property is at the buyer's risk from 5 pm on the first business day after the contract date.The buyer must insure the property or at least take out a cover note on the first business day

after signing the contract. Along with all clauses, the agent should point this contractual termout clearly to the buyer. Some agents have relationships with brokers of insurance whichthey can guide the buyer to. However, if the agent receives any benefit from this referral, itmust be disclosed to the buyer on the Property occupations Form 8Disclosure to Buyer.

[17.4.8] Access (Clause 8.2)

After reasonable notice to the seller, the buyer and their consultants may enter the propertybetween the date of contract and the date of settlement, namely:

Once to read any meter

For building and pest inspections

Once to inspect the property before settlement

Once to value the property before settlement

[17.4.9] Foreign ownership (Clause 10.2)

The Foreign Acquisitions and Takeovers Act 1975 (Commonwealth) is the principal meansby which the Commonwealth records regulate foreign investment in Australia. It isadministered by the treasurer on the advice of the Foreign Investment Review Board (FIRB).

Some foreign buyers will need FIRB approval before entering into a contract. They shouldobtain legal advice before signing the contract.

Basically, if a foreign person wants to acquire an interest in Australian urban land, thatperson must obtain the treasurers approval via FIRB. A notice setting out the proposal to


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acquire such an interest has to be sent to FIRB by the buyer. FIRB then examines theproposal and decides if the proposed acquisition would be contrary to the national interest.

The REIQ Contract for the sale of residential land contains a clause dealing with foreignbuyers, which provides that the buyer warrants that either:

The Treasurer has consented under the Foreign Acquisition and Takeovers Actto thebuyers purchase of the property

The Treasurers consent is not required to the buyers purchase of the property

This clause has very significant consequences for a buyer who needs FIRB approvalbecause the buyer warrants that the buyer already has consent to purchase property inAustralia. If there is any doubt as to whether or not FIRB approval is required, the buyershould be advised to obtain legal advice. Solicitors acting for a foreign buyer should modifythe REIQ contract by inserting a special condition into the contract, making it conditionalupon FIRB approval being obtained by the buyer.

While guidelines are issued by the FIRB as to who is or who is not entitled to approval, careshould be taken when making any statement to foreign potential buyers.

[17.5] Disclosure

To ensure that the contract settles, the agent should conduct all necessary searches prior tothe signing of the contract and disclose all matters affecting the property to the buyer. Themain areas for caution are with respect to:

Clear title

Building matters

The affairs of a body corporate

Once a relevant matter has been disclosed in writing on the contract of sale, the seller hasperformed their duty and the buyer accepts that they are contracting with full disclosure ofthe relevant facts. Contracts formed under these circumstances are binding and thereforehave a high chance of completion.

[17.6] Learning activity unit 18

Question 1: What are some of the warranties offered to a buyer in the contract of sale?

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Question 2: Identify at least two potential defects in title or property

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Question 3: You are listing a property for sale that is affected by the Queensland HeritageAct 1992 (Queensland). How would you advise the client to handle this situation regardingthe preparation of a contract of sale?

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Question 4: You have successfully negotiated a contract for the sale of a house. Thedeposit is $50,000. The contract settles in 30 days. The buyer and seller have requested thatthe deposit be invested in a special trust account so that they can earn interest. Can you dothis? Please explain your answer.

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Question 5: You are selling a home unit to an investor who is a citizen of Singapore. Can

you sign them up on an unconditional contract? Please explain your answer.

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PART 6: COMPLETION GUIDE FOR CONTRACTS

UNIT 18THE REIQ CONTRACT FOR HOUSES AND RESIDENTIAL LAND

This unit is a step-by-step guide on how to complete the REIQ Contract for Houses and

Residential Land.

[18.1] Contract format

The contract can be accessed on computer through REIQ Realworks program or purchasedas a stationery item from the REIQ shop.

Pages 1 to 4 are known as the Reference Schedule. Space has also been allocated on page4 for Special Conditions. The buyer and seller sign at the bottom of page 4 and initial everypage on the bottom right hand corner marked initial. The page numbers are footers in eachpage.

The contract contains a separate schedule, referred to as Terms of Contract, which are theimplied terms and conditions of the contract, which are not commonly negotiated and form aseparate part of the contract. The buyer and seller must also initial the Terms and Conditionsat the bottom of each page.

[18.2] How to fill out the reference schedule

The Reference Schedule to the contract is the most important section as it specifies alldetails and the negotiated elements of the contract.

The agent has a legal obligation to ensure that the information in the Reference Schedule iscorrect. Care at this stage means protection for all parties. The REIQ recommends thatagents prepare a contract at the time of listing and to liaise closely with the sellers solicitor toensure that all essential information and disclosures are inserted and are correct.

The agent must, at the time of listing a clients property for sale or lease and at all later times,encourage the client to disclose to the agent all relevant facts about the property.

When preparing contracts the agent is required to conduct searches to verify:

Ownership details

The real property description

All relevant material facts regarding the property

A relevant material fact is any registered dealing over the property, including anenvironmental protection order, a listing on the contaminated site register, a local authorityorder, or encumbrances over the title.

The seller should inform the agent of any matter that is pertinent to a buyer that affects theproperty. Any of the above would be a pertinent matter. Other matters may include issuessuch as known termite infestation, major structural problems and adverse matters, such asproposed resumptions and infringements over the land.

The agent should conduct a title search immediately before preparing a contract to ensurethe agent has time to attend to emerging problems.


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[18.3] A guide for completing the Contract for Houses and Land

Following is a guide to completing the REIQ House and Land contract. At the end of thistheoretical study, you will review an example contract and also complete a case study tocomplete the learning.

[18.3.1] Contract date

A contract is not dated until all negotiations are completed. The date is the final addition tothe contract. After the offer and acceptance occurs, and all documents signed and initialledby all parties the contract is then dated by the agent. When the agent is preparing thecontract document for signing, the date section of the form must remain empty.

[18.3.2] Agent

The selling agent's business name, address, telephone, facsimile and email details are beinserted, together with the agents ABN and licence number.

Note:This section is the name of the business, and not the individual sales representatives details(e.g. Top Real Estate Pty Ltd trading as ABC Realty, 30 Bright St, Riverside).

If the agent is selling in conjunction with another agent, both agencies names should be on the contract. There is no requirement to indicate the commission split as this is a separateagreement between the agents involved.

[18.3.3] Parties

Full details of the seller and buyer and their respective solicitors are required to clearlyidentify all parties and provide addresses for the service of notices.

It is important that the agent cautions the buyers prior to preparing the documents that theygive their exact names in which the property is to be registered. If the property is forinvestment the buyers should seek advice from their accountant. Changing names on thecontract prior to settlement may incur extra stamp duty.

An address for both parties to ensure prompt service of notices is necessary as there will bea number of communications during the conveyance period. The agent should ask both

parties for their solicitors details including the actual solicitor who will be representing them.This persons name should be entered in the section ref.

An example of correct information gathered is:

Seller: Allan John SEYLTERS and Mary Ellen SEYLTERS21 High Drive, MOUNTAINVIEW QLD 4987T 3278 0034 F 3278 0012


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Solicitor: Smith and Co., 10 Court Ave, CITY. QLD 4000T 3356 9876 F 3356 9871 Ref: John SmithEmail: [email protected]

Buyer: Dean Todd BLYTHESS and Tracy Linda BOYCE145 Green Plains Road, COUNTRYSIDE QLD 4020

T 07 4445 8796

Solicitor: A. Jones, 25 Title Street, COUNTRYSIDE QLD 4020T 07 4445 0246 F 07 4445 0255 Ref: Mary JonesEmail: [email protected]

[18.3.4] Property

Land: The agent should do a title search before completing the description of the land

Address: If possible a street number should accompany the address or, in the absence

of a street number, a detailed plan indicating the location of the property should beattached

Description:The Real Property Description (RPD) is essential. The description includesa lot number, registered plan number and Parish and County details

Considerable complications can arise during the conveyancing process if the description isnot accurately stated. If the agent is dealing with selling allotments off-the-plan which has notyet been registered, it is best practice to consult with the sellers solicitor to obtain theaccurate description of the subject property.

There is an option in the contract for vacant/built-on and freehold/leasehold. Delete or state

whichever is not applicable, respectively.

[18.3.5] Title reference

This refers to the subject propertys title reference number which is at the top right ofthe titlesearch, or the registered number of the Crown Lease, if applicable.

[18.3.6] Land area

The contract states more or less in this instance, but the agent must not be complacent

when filling out land area. If the agent does not know the exact area of the block it is best toleave it out until this fact can be verified. Agents have been successfully sued in situationswhere the incorrect area was shown on the contract.

Do not, under any circumstances, attempt to alter the area from the way it appears on theRegistered Plan; such as in the conversion from imperial to metric measurement. The agentshould consult the sellers solicitor if in doubt and be guided by the sellers solicitor. Do nottake on this responsibility.

An example of search details:

Address: 20 Ocean Rise, BEACHMERE QLD 4444.Description: Lot 66 on RP 2468, County Stanley Parish South BrisbaneTitle Reference 4281964Area: 809 mLand sold as Freehold


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[18.3.7] Present use

In this section of the contract, the agent should insert a brief description of the current usemade of the property and be guided by the agents ownership search details with respect tozoning; such as:

If the property is a house or residential land, present use would be described asresidential

If the property is a factory it could be described as heavy industrial; and a shop ascommercial

The agent should be aware that in some situations a property owner may be using theproperty contrary to zoning restrictions as a place of business, and therefore the agent mayassume the property has commercial zoning. If at the contract date the present use enteredon the contract is not lawful then the buyer may terminate the contract. The agent mustinform the buyer if the present use of the property is unlawful prior to entering into a contractand by entering the correct present use in the contract the seller and the agent have made

the correct disclosure.

[18.3.8] Local government

Insert the name of the local government council where the land is situated, such as: BrisbaneCity Council, Woocoo Shire Council.

[18.3.9] Excluded fixtures

Excluded features are items which the seller is excluding from the sale; such as a built-inbookshelf, built-in dishwasher, air conditioner, pool equipment, barbecue burners, gardenshed or any other fixed items which would normally be included in the sale but in thisinstance the seller is excluding them as they wish to keep them.

It is best practice for the agent to refer to page 5 of the contract, point 1 of Definitions (q) onImprovements and read the standard Terms of Contract regarding those improvements thatare deemed a part of the sale.

[18.3.10] Included chattels

Chattels are objects that a seller is entitled to remove from the property but have beenincluded in the sale. Examples are such items as a ride-on mower, furniture, pool-cleaningequipment, pool umbrella, washing machine. The agent should detail these as includedchattels in the contract.

[18.4] Matters affecting property

As soon as the agent lists a property the contract should be prepared, giving ample time tocheck it thoroughly. It is critical that the title search is done prior to preparing the contract inorder that any encumbrances which will not be released on or before settlement can benoted here on the contract.


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[18.5] Price

[18.5.1] Deposit holder

Insert the name of the person or company who is the deposit holder. Usually this will be theagent but can also be either the sellers or buyers solicitors. It is important to note that any

deposit must be banked into a Trust Account.

If the contract is more than 60 days in duration, the parties may elect to have the depositinvested in a special trust account. All parties to the contract must agree to invest the depositand a special clause should be entered into the contract specifying in whose name theaccount will be held and to whom the interest will be paid at the time of settlement. Thespecial trust account must be opened in the name of the agency as trustee for the parties tothe contract, as per the requirements of the POA.

[18.5.2] Purchase price

Insert numbers only, it is not necessary to use words. It is common practice to negotiate onthe contract and there should be enough space for counter offers and initialling.

[18.5.3] Deposit

The deposit is sometimes paid in two instalments - an initial holding deposit and then abalance of deposit at a later date.

However, if the deposit is payable in one payment, it would be stated thus:

Deposit: $35,000 payable when the buyer signs this contract.

Where the deposit is payable in two instalments, it would be recorded as:

Deposit: $ 5,000 payable when the buyer signs this contract.$30,000 payable on a specific date or event.

Agents should endeavour to make sure that the first instalment of the deposit is sufficient tocover the termination penalty (should a buyer use the cooling off period to terminate thecontract). The termination penalty is calculated at 0.25% of the purchase price. It should benoted that it is not a legal requirement for a buyer to pay a deposit however it is stronglyrecommended.

[18.5.4] Default interest rate

Leave this section of the contract blank because when there is no figure stated, the ratepublished by the Queensland Law Society will apply.

This rate is usually quite high and is calculated daily. Clause 9.9 specifies the interest ratepayable by the buyer to the seller if any money under the contract is not paid by the duedate.

[18.5.5] Finance

If the contract is subject to finance all 3 sections of finance in the Reference Schedule mustbe completed, otherwise the contract is not subject to finance (as per the instructions notedon the contract).


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A buyer should not be restricted in being able to shop around for suitable finance if a lenderdeclines their application or they decide to sign up with another financial institution. It isimportant that if finance is not approved, the onus is upon the buyer to prove that anapplication was lodged with the institution nominated on the contract. If the finance clause isused as it stands, it should be fully completed.

Refer to the contract Clause 3 on page 7, Finance, and read the clause that applies to thisprovision. If the contract is a cash sale, then this section is left blank.

[18.5.6] Finance amount

The finance amount is the amount that the buyer needs to borrow to complete the purchase.Insert numbers only. There is no need for words. If no finance is being obtained, do notdelete the clause; just leave it blank.

[18.5.7] Financier

Identify the proposed financier, bank, building society, and branch office, if known. Ifunknown, it is best practice to insert wording such as A FINANCIAL INSTITUTION.

[18.5.8] Finance date

The finance date is the date by which the buyer must notify the seller that the application forfinance has been either approved or declined. The agent should ensure that this is abusiness day. If the buyer does not notify the seller either way by 5.00pm on this date, theseller has the option to terminate the contract or grant an extension of time to the buyer if the

buyer requests an extension. See clause 3 of the contract

It is best practice to insert an actual date for approval; such as 16 March 2015, rather than aphrase such as 21 days from the date hereof. This reduces ambiguity of when a noticeshould be given, especially if a party is working from an undated contract.

[18.6] Buyers inspection

[18.6.1] Building inspection and pest control inspection

This clause is at the option of the buyer and is commonly exercised. If the contract is subject

to a building and/or pest inspection, the inspection date must be completed for either of theseconditions to apply.

This will automatically mean that Clause 4 (Terms of Contract) relating to building inspectionand pest inspection reports will apply. If this section is not completed, the contract will not besubject to the buyer obtaining a satisfactory building or pest inspection report.

The buyer must notify the seller by 5pm on the inspection date as to whether they havereceived a satisfactory building and/or pest report and they wish to proceed with the contractor terminate. If a buyer has not done this by 5pm on the nominated inspection date, theseller has the right to terminate the contract or, if requested by the buyer, grant an extension.All contract notification must be in writing.

The building inspector nominated by the buyer must be an appropriately licensed inspector,architect or engineer. The report must be in writing and the seller reserves the right to inspectthe report if it the buyer claims that it is not satisfactory and terminates the contract. If thebuyer or seller requests a different building or pest inspection clause to be inserted under


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special conditions on the contract, then this standard special condition should not beactivated and the space should be left blank.

In some instances, buyers may elect to either have separate inspectors for building or pestinspections, or only choose one of the inspections. It is however, common for a buyer to electto have both inspections done.

[18.6.1] Title encumbrances

This section requires the agent to indicate whether the Property is to be sold subject to anyEncumbrances. The agent is to tick either no or yes. Where yes is ticked, theEncumbrances are to be listed in the relevant area.

Clause 7.2 in the contract states The property is sold free of all Encumbrances other thanthe Title Encumbrances and Tenancies. The sellers mortgagewill be released at settlementtherefore it is not to be entered on the contract as an encumbrance.

Property is defined in Clause 1.2 (aa), as the land, the improvements on it and the includedchattels, therefore any encumbrances on the improvements or chattels such as bills of saleor liens must be removed before settlement.

Most Queensland titles, the section marked under easements, the words Rights andinterests reserved to the Crown by Deed of Grant No.Do not enter this on the contract as itis not an easement. This term means that the Queensland Government has the right toacquire, by purchasing land that the Government needs such as land required needed tobuild a new highway or rail line.

When completing this section it is important to make accurate disclosure. The old practice of

writing none known or title will reveal is unacceptable. There is a legal expectation that theagent will search a title prior to marketing a property in order to avoid giving false andmisleading information to prospective buyers regarding encumbrances on the property.

If there are encumbrances on the title such as easements, covenants, caveats, councilregistrations, or heritage listing, etc., and these are not revealed to the buyer at the time ofsigning the contract the buyer has the right to terminate the contract at any time up until twobusiness days prior to settlement.

[18.6.2] Tenancies

This part is optional, and is only completed if the property is sold with a tenant in place whowill remain after settlement. The buyer in this case becomes the lessor after settlement. Thisis common with an investment property. Include details of any tenancy, as in this example:

Tenants name: John David SMITHTerm and Option: 1 yearStarting Date of Term: 10 January 2013Rent: $500 per weekBond: $2000 (RTA receipt number 4428)

[18.6.3] Vacant possession

If the property is being sold as vacant possession then the tenant must vacate the propertyby settlement. If vacant possession is required, the tenancy clause must be left blank. It isessential that the agent ensures that the tenant is given adequate notice to vacate the


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property in accordance with the Residential Tenancies and Rooming Accommodation Act(RTRA Act).

When determining the date of settlement of a tenanted property for which vacant possessionis required, the notice to leave should not be issued until other contract conditions, wherepracticable, have been fulfilled.

There are two types of tenancy agreements as per the RTRA Act - fixed term and periodic.

A fixed term tenancy means that the tenancy is for a fixed time frame, meaning that there is adefinite start date and a definite end date. If the end date of a fixed term agreement haspassed and there is no information to say the lessor or tenant has given notice to end thetenancy, the tenancy automatically becomes a periodic tenancy; it doesnt just end.

A periodic tenancy is any tenancy arrangement where there is no formal fixed term lease inplace or where the fixed term has expired.

A tenant on a fixed term tenancy must be given two months written notice for the tenancy toend without grounds, or for no reason. The tenancy cannot end before the end date of thetenancy (unless all parties agree). If a buyer buys a property with a tenant on a fixed term,the buyer inherits the tenant and becomes the lessor (unless ALL parties agree otherwise).

Four weeks notice can be issued in the event of a sale if the buyer wished for vacantpossession and the existing tenancy is periodic.

Case studyContract with periodic tenancyvacant possession required

You receive an offer for a property that is listed for sale and is also currently rented witha periodic tenancy in place. Best practice is to ensure that all the buyers conditions

are met before the tenants are given notice to vacate.

In this situation a tenant can be given 4 weeks notice to vacate. Also factor in 2 daysfor postage (if not hand delivered) and a further 2 days for the lessor or propertymanager to ensure the property is vacant, inspections have been done and theproperty is left in the same condition that it was when the tenant moved in, fair wearand tear excepted.

In total, it is best practice to allow a minimum of 32 days once all the contractconditions have been met before settlement occurs.

[18.6.4] Managing agent

If the property is managed by a real estate or resident letting agent, insert the requireddetails.

[18.7] Pool safety

It is a requirement that a seller of a property with a regulated pool that is a non-shared pool(typically a house) provides to the buyer, prior to settlement, either a copy of a valid PoolSafety Certificate. If a certificate cannot be provided, a notice in the approved form, a Form36, must be given to the buyer prior to the contract being entered into, stating to the buyer

that there will not be a pool safety certificate in place prior to settlement. This form must alsobe given to the Pool Safety Council.


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Under the REIQ Contract for Houses and Residential Land, if the later of the two options isprovided to the buyer, the buyer will inherit the obligation to ensure that there is a valid poolsafety certificate in place for the regulated pool within 90 days of ownership at their expense.

If there is not a valid pool safety certificate in place at the time of the contract being formedbetween the seller and the buyer, there is provision that the buyer may arrange for a pool

safety inspection to be conducted within a nominated time frame (under similar terms to abuilding or pest inspection). If the inspection results in a pool safety certificate being issuedby a suitably qualified inspector, there is no further action required by either party.

If the inspection result in a notice being issued for non-compliance, the buyer has the right toterminate the contract by notice in writing to the seller or to waive the condition and thecontract proceeds, as per the provisions of Clause 4.7 of the terms and conditions (refer toClause 4.7 and also the reference schedule of the contract inserted later in this unit).

Agents should be mindful that they inform all parties involved that a pool safety inspectioncan only be carried out by a suitably qualified pool safety inspector. Checking contractorsqualifications can be done so through the pool register located on the Department of Housingand Public Works websitewww.hpw.qld.gov.au

Any agent that is employing the services of a pool safety inspector on behalf of a clientshould ensure that they have a completed and signed contractor appointment form from theinspector and also check the pool register via www.hpw.qld.gov.au before engaging anyservices.

It is prudent for an agent to ensure that the issue of a pool safety certificate is discussed withtheir client at listing stage and throughout the marketing of a property. Having a pool safetycertificate in place at the time of a contract being formed will minimise any possiblenegotiation issues between the seller and buyer.
http://www.hpw.qld.gov.au/http://www.hpw.qld.gov.au/http://www.hpw.qld.gov.au/http://www.hpw.qld.gov.au/http://www.hpw.qld.gov.au/http://www.hpw.qld.gov.au/http://www.hpw.qld.gov.au/


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REIQ Fact Sheet: Sale of a property with a non-shared pool


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[18.7.2] Electrical safety switches

All residential dwellings sold in Queensland must include a special condition in the Contractstating whether an electrical safety switch has been installed on all general purpose circuits.The special condition provides for the seller to disclose whether safety switches are installedor not. If no safety switch is installed, the buyer shall inherit the responsibility to have a safety

switch installed within three months from the date of settlement.

It is the sellers responsibility to notify the electrical authority of the existence or non -existence of a safety switch at the time of settlement. The agent should not tick either of theboxes without the sellers instructions. Refer to the warning statement in the Electrical SafetySwitch section of the contract.

Note: Every rental property in Queensland must have had a safety switch installed in theproperty as of March 1st2008.

[18.7.3] Smoke alarms

Any home built from July 1 1997, or any home that has had renovation to more than 50% ofthe total floor space has to have a hard wired smoke alarm installed.

Every residential dwelling (houses and units) in Queensland must have at least the minimumspecified number of smoke alarms installed in the dwelling. This is a requirement as per theFire and Emergency Services Act 1990. This requirement applies to all properties, not justthe rental sector.

The smoke alarm must be installed on, or near, the ceiling on every storey of the building:

Between any areas containing bedrooms and the rest of the house, e.g. hallways On a storey not containing bedrooms on the most likely evacuation route from that storey

The law requires a minimum standard of alarm to be installed in the property. The minimuminstallation requirement is nine volt battery operated alarms. The number of alarms requiredto be installed is determined by the levels of the home and where the bedrooms are situated.Sellers are required to disclose to buyers on sales contracts whether there is a smoke alarminstalled.

The seller of residential land is required to provide the Chief Executive of the QueenslandLand Registry with a written notice stating whether smoke alarms are installed in the property

at the date of possession by the buyer; and if the seller has provided the buyer with writtennotice of whether compliant smoke alarms are installed in the property as at the date ofpossession.

The requirement will be met through the Queensland Land Registry documentation Form 24Property Transfer Information, which is completed during conveyancing.

At the time of listing the agent should ask the seller if there are smoke alarms installed in theproperty. If the seller does not have the required smoke alarms, the agent shouldrecommend, in writing, to install the required number of alarms prior to selling the property.This will not only assist the seller in complying with the law, but also will alleviate anypotential conflict between the buyer and seller at the time of contract due to non-compliance

with the fire legislation.

The agent should tick whether or not compliant smoke alarms are installed. This provision isnot the same as safety switches which allows for the buyer to inherit the responsibility of


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installation; it is mandatory that sellers have compliant alarms installed at the time of sellingtheir property.

[18.7.3] Neighbour Disputes

The Neighbourhood Disputes (Dividing Fences and Trees) Act 2011 contains specificprovisions relating to the sale of land affected by an application or order in relation to a tree.

Section 83 of the NDFT act requires a person who is selling land affected by an applicationor order relating to a tree, to give a buyer a copy of the application or order before the buyerenters into a contract of sale for the land.

The agent should tick whether or not the Land is affected by any application to, or an ordermade by, QCAT in relation to a tree on the Land. If there is such an application or order, theagent must ensure a copy of that document has been to the buyer prior to the buyer signingthe contract.

[18.8] Settlement date

The agent should insert the date for settlement and ensure that it is a business day. Thesettlement date should be compatible with other conditions of sale, such as notices totenants and any prior settlement arrangements.

It is important to insert an actual date rather than a calculation term, such as 30 days fromthe date hereof. This adds certainty to the contract and ensures that all parties are clearabout their obligations to settle at a certain time: for example2 April 2015.

[18.8.1] Place for settlement

The agent should insert the city or town where settlement is to occur, which is commonlywhere the sellers mortgage is held, or where their solicitor or bank is situated, such as,Brisbane.

[18.9] Signing

Most often, it is the buyer who makes the offer by signing a contract document and delivers itto the seller. When a seller alters the terms of a buyers offer, initials the changes and returns

the contract to the buyer, the seller is making the counter-offer.

When the seller accepts the buyers offer a binding contract is created. In Queensland thereis no exchange of contracts, as the one contract document is required. The contractdocuments signed by the buyer are referred to as the offer; and the buyer must be preparedto proceed if the offer is accepted by the seller which is signified by the seller signing thecontract. This procedure is different to other states, and buyers need to be made aware ofthe significance of signing a contract in Queensland.

The contract includes a warning statement relating to the sellers cooling off rights. Thewarning statement is as follows:

The contract may be subject to a 5 business day statutory cooling-off period. Atermination penalty of 0.25% of the purchase price applies if the buyerterminates the contract during the statutory cooling-off period. It isrecommended the buyer obtain an independent property valuation and


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independent legal advice about the contract and his or her cooling-off rights,before signing.

The deposit holder is also required to sign the contract, acknowledging their responsibilitiesin relation to the deposit.

[18.9.1] Witness

The buyer and seller sign on page 4 in the presence of a witness. The agent usuallywitnesses the signatures if the signing is done in person; however, if the documents arebeing signed elsewhere, the agent should advise the buyer or seller to have the signatureswitnessed.

[18.9.2] Initialling

It is essential that all parties to the sale initial each page, and all alterations or changes to thecontract. The agent cannot initial a contract on behalf of a party to the contract unlessauthorised in writing to do so and this practice is not recommended.

The deposit stakeholder must sign on page 4 when the whole deposit or the first instalmentof the deposit is received from the buyer. The principal licensee or licensee in charge shouldsign as deposit stakeholder; and not the agent.

[18.10] Contract special conditions

Some common special conditions drafted concerning residential property sales are:

Subject to the sale of the buyers property

Subject to the completion of the sale of the buyers property

Subject to the transmission of title by death

Subject to the registration of the registered plan

Subject to the completion of building works

Most agencies have precedents of common special conditions provided by their legaladvisors. If a buyer or seller requires an unusual special condition they should consult withtheir solicitors regarding the wording of the clause and have it forwarded to the agent. Agents

are not solicitors; and should not attempt to draft special conditions. It is essential that theagent liaises with the respective partys solicitor.

REIQ best practice recommends the agent undertake a title search at the time of listing theproperty. The agent should undertake another title search before completing the contract toensure any change in title is identified and placed in the contract.

Once the contract is signed by all parties, the agent should disburse the copies immediately.The agent should not keep possession of the contracts pending finance or special conditionsetc. This action must void the sale. Correctly providing the buyer or the buyersrepresentative with the contract will commence the provisions of the cooling-off period.

The following important dates should be noted in the agents diary for follow-up:

Cooling-off period

Finance approval


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Payment of deposit instalments

Building and pest inspection

Other special conditions

Settlement

The agent must alert the seller that any problems subject to a local authority notice, or anotice under the Building Act, could entitle the buyer to terminate the contract. The sellershould also be advised that all keys and remote controls belonging to the property must belocated and ready for settlement.

[18.11] Dates

[18.11.1] Dates where possible should always be actual dates.

Phrases similar to 30 daysfrom the date hereofor 30 days from contract dateshould not

be used, as some parties to a contract calculate dates differently, causing uncertainty in thenotification deadlines. For example, dates under the POA include the date of document asthe day one. This conflicts with common law, where the calculation of dates does not includethe date of document as the day one.

It is very difficult for third parties to a contract, especially financiers, to perform in accordancewith the contracts Special Conditions when they are referring to a copy of an undatedcontract with the finance clause stating that finance notification is due 21 days from the datehereof. In this case, 21 days from what date? Best practice to ensure certainty is to insertan actual date.

[18.11.2] Dates for finance (should be a business day)

A reasonable length of time should be allowed. If the time is too short, the buyer may need torequest an extension, which may give both parties to the contract an opportunity to withdraw.

The time required for finance is dependent on the merits of each individual application andthe type of institution involved. As a guide, it is reasonable to expect a straightforwardapplication to be processed by a bank, building society or credit union, in 21 to 28 days.However some mortgage insurance companies may demand that the financier allow at least35 to 42 days for processing some residential finance applications.

Prior to preparing the offer, the agent should ask the buyer to check with their financialinstitution regarding loan applications processing time. The agent should caution the buyerthat if this period is too long, the seller may consider the offer unattractive. The final date forthe finance must be a business day.

[18.11.3] Building and pest inspection dates

Building and pest inspections can usually be completed within 7 calendar days. However thebuyer can allow for any time frame such as 10 days. The agent must ensure that whencalculating dates the end date for the inspection to be carried out falls on a business day.The building and pest inspector must be suitably qualified to carry out the inspection and

prepare the required written report.

If the sellers are not going to be at home at the time of inspection, building and pestinspectors may require the agent to be present.


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Sufficient time should be allowed on the contract for the inspection to take place, the reportto be prepared and delivered to the buyer. The reports are often emailed to the buyer tomake a decision whether or not they intend to proceed with the contract.

If either the building or pest inspection reveals significant problems the buyer has threeoptions; namely:

Accept the property as is and proceed with the contract

Terminate the contract

Renegotiate the contract taking into consideration the cost of rectifying the problemsrevealed by the inspections

The seller has the right to request a copy of the reports if the contract is to be terminated orrenegotiated. The sellers also have the right to choose whether they will enter into a furtherprice negotiation or instruct the agent to seek another buyer. If the contract is to berenegotiated at this stage, the negotiations are usually conducted through the respectivesolicitors as they now hold the contracts. The agent still plays a very important role in thenegotiation and strives to keep the contract together.

[18.11.4] Pool Safety

A seller of a property with a non-shared pool has an obligation prior to settlement to give thebuyer a copy of the pool safety certificate. If they cannot provide a copy of the pool safetycertificate prior to settlement, they must give the buyer a Form 36 Notice of no pool safetycertificate prior to a contract being entered into. If the seller gives a buyer the Form 36, thebuyer may inherit the obligation of bringing the fence up to compliance standards and havinga pool safety certificate in place within 90 days of settlement. The REIQ Schedule and Terms

of Contract of Sale for Houses and Residential Land outline that a pool safety inspectioncondition is triggered, (refer to the sample contact at the end of this manual) if a Form 36 isgiven to the buyer prior to the contract being entered into.

This condition enables the buyer, at their expense, by a nominated date, to arrange for asuitably licensed pool safety inspector to inspect the pool fence and issue a pool safetycertificate, or if one cannot be given due to non-conformity, the inspector will issue a non-conformity notice to the pool owner. The buyer will have the right to either, waive thecondition and let the contract proceed or terminate the contract by notice in writing to theseller if they are not willing to take on the obligation.

If a notice of non-conformity is issued to the pool owner, the pool owner cannot ask anotherinspector to inspect the pool within 3 months of the issue date of the non-conformity noticebeing given. It would be prudent for an agent to recommend to all sellers of properties with anon-shared pool to ensure that there is a valid pool safety certificate in place ultimately priorto a contract being formed, but even perhaps as earlier as when the property is first listed onthe market for sale.

[18.11.5] Dates for settlement

Date for settlement should allow enough time for all conditions to be met such as financeapproval or tenants to vacate. In Queensland, a sale subject to finance can usually be

completed in 30 days; but contracts of 45, 60, or 90 days settlement are not uncommon.

The contract settlement date is more often negotiated than the price of the property. Eachparty wants a settlement date that suits their plans; such as the settlement of the buyersexisting home will influence the buyers choice.


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One of the most difficult times of the year to negotiate a settlement date is prior to Christmaswhen the buyer wants possession prior to the holidays and the seller does not want to moveuntil after the holidays. An agents negotiation skills can often be tested at this point of thecontract.

When the settlement of the buyers present property is a condition of the contract, it is

important that the settlement dates are the same because the proceeds from the prior saleare to be used for the purchase of the new property. This is known as a contemporaneoussettlement which means that both sales will settle at the same time.

[18.11.6] Time limits

When a party has a duty to perform under the contract, such as a buyer obtaining asatisfactory building inspection, a date must be inserted in the clause declaring by which theduty has to be performed. This clause should clearly state what the result is if the requiredaction is not completed by the due date.

[18.11.7] Calculating contract dates

When preparing a contract where negotiations have not yet been finalised, it is prudent todraw a time line of all the special conditions.

Each special condition has a time limit as to when it will be fulfilled; such as relevantcontracts are subject to a cooling-off period of five business days.

If the contract is subject to a satisfactory building and pest inspection this clause wouldusually be 7 calendar days.

If the sale is subject to finance, notification will probably take longer; usually about 21calendar days, and wont be due until after the cooling-off period has expired and the buildingand pest inspection clause fulfilled.

All special conditions are recorded along the time line in order, from shortest period tolongest. The agent should assess how long it would take to complete negotiations for thesale, being guided by:

The difference between the offer and the listed price

The agents knowledge of both the sellers andbuyers motivation in the sale

The number of parties involved, and the respective ease of contact, having impact onnegotiation finalisation

Whether the buyers and sellers live locally or interstate.

The period of time to finalise the negotiations must be estimated to determine when thecontract can be formed and dated. This is the date from which to calculate the remainder ofdates.

Example: The agent is preparing the contract on the 20 thSeptember and anticipates that itwill take two days to finalise negotiations. All the Contract Special Conditions and settlementdates would then be calculated from the 22ndSeptember. If the negotiations take longer thananticipated and the contract is not formed and dated, the dates on the contract may be

altered during finalisation. All parties to the contract would then initial the changes to indicatetheir respective consent.


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[18.12] Deposits

The agent must ensure that the buyer is clearly aware of the provisions of the deposit clause.Occasionally, buyers do not realise they have to find extra money before settlement for thedeposit. They often mistakenly believe that their financier will advance money to them oncefinance has been approved.

Buyers may also believe that if they are selling a property they will be able to release thedeposit on that property to pay a further deposit. Quite often people sign contrac

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CPPDSM4008A Manual Part 2 v15.1 December 2014

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