HG Alert: Welcome Amendments to Warning Statement Requirements under the Property Agents and Motor Dealers Act 2000 - 26 Mar 2010

Intended to simplify the process for buyers and sellers entering into contracts for residential property and units, the Property Agents and Motor Dealers and Other Legislation Amendment Bill 2010 was introduced into the Queensland Parliament on 24 March 2010. While the Bill is yet to be passed, it is intended to come into effect from 1 October 2010.

Here are the five most important changes that will come from this legislation:

  1. The current regime, which requires directions to be given to a buyer after signing the contract before they are ‘bound’ under that contract, has been removed. This is a welcome return to basic common law principles to determine when a buyer and seller are bound to a contract. As many in the property industry will be aware, the requirements of the current legislation have resulted in non-compliance problems in some transactions. Those suffering from ‘buyer’s remorse’ could use this to walk away from contracts on what were purely technical grounds.
  2. A direction to a warning statement and contract (or an information sheet if a unit sale) is only required to be given to a buyer at the time the proposed contract is presented to the buyer. The changes will make it clear that the requirements for a warning statement to be attached to a contract, and for a direction to be given to the buyer about the warning statement, only apply where the seller gives the proposed contract to the buyer. The Bill also proposes that where the parties enter into negotiations over the terms of the contract, the direction requirements will not arise again, so long as the property and the parties remain the same. This will help alleviate some of the difficulties arising from Rice v Ray.
  3. The requirement that the warning statement be the first or top sheet of the contract has been removed. Under the proposed changes, contracts will be compliant so long as the required warning statement and any information sheet (for a unit sale) are attached to the contract, regardless of where they appear.
  4. The process for issuing contracts by email and facsimile has been simplified and clarified. There is no longer a set order for how the documents must be presented when contracts are issued by facsimile.
  5. A 90 day time limit for a buyer to exercise a termination right has been introduced. If a buyer wishes to terminate a contract because the warning statement requirements have not been complied with, the buyer must act within 90 days of receiving the signed contract from the seller. This time limit will provide some comfort to developers in off-the-plan sales, which often involve a lengthy period between signing the contract and settlement. At the moment, a buyer may be entitled to terminate the contract at any time before settlement.

As the changes introduced by the Bill will affect the rights of parties to existing contracts, it contains extensive transitional provisions. As a result, the rights of buyers under the existing law to withdraw from transactions will be lost when the new regime begins.

We will closely monitor the progress of the Bill through Parliament and will keep you updated. Once the Bill has been passed, we will issue a detailed article about the changes relating to residential property sales and unit sales.

For more information, please contact HopgoodGanim’s Commercial Property team