Saturday, 24 May 2014

QLD: A New Era for Property Transactions in Queensland – Property Occupations Act 2014 to Replace PAMDA

Australia: A New Era for Property Transactions in Queensland – Property Occupations Act 2014 to Replace PAMDA

Real Estate Alert
Last Updated: 12 May 2014
Article by Kylie Maxwell and Mark Foy

New Legislation Replacing PAMDA

The Property Occupations Act 2014 (POA) was passed on 6 May 2014. The date of commencement has not yet been announced or proclaimed.
Those familiar with property transactions in Queensland will welcome the POA and the repeal of the Property Agents and Motor Dealers Act 2000 (PAMDA). This is because the new legislation should:
  • simplify the contract formation process
  • reduce incidences of contract termination and disputes for non-compliance.

How will Property Transactions be Affected?

  • The definition of 'Residential Property' has been simplified. Contracting parties will have greater certainty on whether the POA will apply to a transaction.
  • The PAMDA Form 30c Warning Statement and Body Corporate and Community Management Act 1997 Information Sheet will no longer need to be attached to contracts. Instead, a prescribed statement must be written in a contract immediately above and on the same page where the buyer signs.
  • If the prescribed statement is not included, the buyer will not be able to terminate the contract. The seller or the seller's agent who gave the contract to the buyer instead commits an offence and a financial penalty of up to AUD22,000 may be imposed.
  • A buyer's attention will no longer need to be directed to the PAMDA Warning Statement.
  • The buyer's cooling-off period for a relevant contract of five business days remains.
  • The cooling-off period may be shortened or waived by giving written notice to the seller. The Form 32a Lawyers Certificate required under PAMDA will no longer be necessary.
  • The cooling-off period will only apply to an option agreement and not the contract that may be formed subsequently upon exercise of the option, except where a third party, such as a nominee, exercises the option.
  • Real estate agents' commission rates have been deregulated.
  • The requirement for including the prescribed wording in the contract and the cooling-off period will not apply to a property sold at auction or entered into with a registered bidder by 5 pm on the second business day after being passed in at auction.

What do I Need to do Now?

This Legal Insight is a snapshot of some of the changes that will impact property transactions. There are numerous other changes affecting licensing and the appointment of real estate agents, disclosure of estimated sale prices and option deeds.
To prepare for these changes, it is now time for:
  • developers to review and update precedent off-the-plan contracts
  • sellers (including mortgagees/liquidators/receivers & managers) to review contract documents and sale procedures. Where contracts have been issued to buyers or agents in anticipation of sale, these contracts and processes may need to be changed, depending on the commencement date of the POA
  • real estate agents to review internal processes and precedents, consider if contracts which are not yet signed will need to be changed in preparation for the commencement of the POA and review appointment agreements.
PAMDA will continue to apply to a relevant contract entered into before the commencement of the POA which has not yet settled.
It is imperative that all those involved in Queensland real property transactions be vigilant in monitoring and preparing for the commencement of the POA.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.