New Edition Contract
The 10th edition REIQ Houses and Land Contract came into effect on 1 December 2014 coinciding with the repeal of the Property Agents and Motor Dealers Act 2000 (“PAMD Act”) and the commencement of four new pieces of legislation. The new legislation that is now in effect is as follows:
- Property Occupations Act 2014
- Agents Financial Administration Act 2014
- Motor Dealers and Chattel Auctioneers Act 2014
- Debt Collectors (Field Agents and Collection Agents) Act 2014
Key form changes
- Form 6 – Appointment and reappointment of a property agent, resident letting agent or property auctioneer
- Form 7 – Disclosure of beneficial interest of the seller by a property agent or property auctioneer
- Form 8 – Disclosure to prospective buyer
- PAMD Form 30C Warning Statement replaced with the following statement which has been included in all REIQ residential contracts:‘The contract may be subject to a 5 business day statutory cooling-off period. A termination penalty of 0.25% of the purchase price applies if the buyer terminates the contract during the statutory cooling-off period. It is recommended the buyer obtain an independent property valuation and independent legal advice about the contract and his or her cooling-off rights, before signing’.
- Note: This statement must be written immediately above and on the same page as the place in the contract where the buyer signs. *If the new statement is not included then the buyer does not have a right to terminate but the seller or agent commits an offence.
Commission amounts are no longer regulated. The amount must be expressed inclusive of GST and if in percentage form it must be accompanied by a prescribed statement.
Note: The commission paid by a seller does not have to be disclosed to the buyer, only benefits received.
The new Form 6 replaces the 7 PAMD appointment forms specifically 20a, 21a, 22a, 23, 24a, 25 and 26.
Appointments must now comply with section 104 of the Property Occupations Act 2014.There is a requirement to specify “how” services are to be performed.
Continuing appointments do not require an end date and they may be terminated by either party giving a minimum of 30 days notice unless agreed otherwise by the parties.
Sole and exclusive agency appointments
Limited to a maximum term of 90 days (this applies to residential property sales only). Residential property sale terms require 30 days’ notice to terminate but must be in effect for 60 days.
Section 103 of the Property Occupations Act 2014 requires agents to discuss the following information with their client before the appointment is executed:
- Give the client notice about sole and exclusive agency appointments;
- Discuss whether it is a sole or exclusive appointment;
- The term of appointment;
- The client’s right to negotiate a term up to 90 days; and
- The consequences for the client if the property is sold by someone other than the agent during the term of the appointment.
Agents may be reappointed for terms less than 90 days but must not enter into reappointments 14 days before the term ends.
The assignment of an appointment no longer requires the client’s consent if the terms remain the same. The assignee must advise the client within 14 days that the assignment has occurred but no changes were made and the assignee’s contact details. The client may revoke the appointment by giving 30 days written notice to the assignee.
An agent and/or auctioneer cannot disclose any price/price guide or make any representation about the sale price. The existence of a reserve price can be disclosed, but not the actual price.
If the agent/auctioneer has prepared and given a vendor a copy of a comparative market analysis for the property and a written explanation showing how the agent decided the market value of the property and the vendor has given written consent the agent may pass this on to a prospective buyer.
The price or price range may be disclosed to an electronic listings provider to establish search criteria for the property. It must contain the prescribed statement under sections 214 (5) (b) or 216 (5) (b) of the Property Occupations Act 2014.
The buyer is no longer required to obtain a lawyer’s certificate if they wish to waive or shorten the cooling off period. The buyer may waive or shorten the cooling off period by providing written notice to the seller.
An option contract where the subsequent contract involves the same parties is no longer afforded cooling off.
Cooling off is not afforded to publicly listed corporations or a subsidiary of the same, state government or statutory bodies or where there is a purchase of at least 3 lots at the same time.
Property Occupations Regulation 2014
Specific conduct provisions for auctioneers include:
- Section 23 requires auctioneers to keep a register of each bidder and inform those considering bidding that only registered bidders may place a bid. Previous registrations may be applied. The auctioneer may register the bidder only if they have their personal details, proof of ID and the personal details of any person who the bidder is bidding on behalf of. The auctioneer may then register the bidder by providing them with a unique bidder identifier and record their personal details on the register. This register must be kept for at least 5 years from the last date of entry.
- Section 24 relates to bids made by sellers and requires the auctioneer to give notice to the other bidders that the seller is making a bid also. The seller must not make a bid higher than the reserve price.
- Section 25 provides that an auctioneer may not disclose the bidder’s identity unless it is being provided to an inspector or require by a court. The auctioneer however may disclose the bidder’s identity to the seller or the seller’s agent if it is necessary for negotiation or to facilitate the sale of the property.