The introduction of the Property Occupations Act 2014 by the Queensland Government on 7 May has finally provided what the real estate industry has been lobbying for – industry specific legislation. While most of the major provisions of the Act have not yet come into effect the industry is expecting the changes to come into force before the end of the year.
The legislation has been heralded by both the Government and the REIQ as a ‘win-win for all Queenslanders’, that is, for both industry professionals and for consumers. Simplification and reduction of red tape should make it easier to sell real estate throughout Queensland, presumably providing a boost to the industry and empowering consumers who will have fewer forms to sign and therefore find the system easier to navigate.
The majority of the changes reflect the REIQ’s policy positions and there certainly won’t be any argument from within the industry about deregulation of commissions, a reform first mooted many years ago by the previous governments and not delivered, until now.
In summary the changes mean:
- commissions charged by agents have been deregulated and are no longer capped
- agents do not have to disclose their commission to buyers
- warning statements are now included in contracts
- buyers can waive their cooling-off period more easily
- ban on displaying a price guide for homes listed for auction
- property developers and staff do not need to be licensed
- the statutory limit on lengths of appointments for a sole or exclusive agency has been extended from 60 days to 90 days, and
- stricter disclosure of third party benefits to buyers.
A licensed real estate agent is no longer required to be a director of a corporate licensee for it to qualify for a license. It is enough if the company engages a licensed real estate agent to be in charge of the business. Various persons (including persons convicted of a serious offence within the previous five years) are disqualified from holding a license. A criminal history report can be required at the applicant’s expense and used to assess the applicant’s suitability and the character of their business associates can also be brought into consideration.
There will be one form for appointing an agent, whether the appointment is for sale, letting, management or the provision of other services. It will be ‘basic’ (deal with things common to any kind of agency appointment) and it will be left to the parties to supplement the appointment with additional conditions peculiar to the particular engagement.
That said, we imagine the REIQ will still design sets of conditions for its members to use as ‘standard’, and expect many of them will not be very different from today’s versions, particularly in relation to provisions designed to confer a commission entitlement on the agent where a sale occurs other than as a result of the agent’s efforts, if the relevant trigger event happens during the term of a sole or exclusive agency.
There is no reason to think the concepts of sole and exclusive agency and open listing will not continue to be adopted by agents. The Act recognises the difference.
Contract and related requirements
Whether or not property is ‘residential property’ continues to be relevant. That triggers the cooling off requirements. There is a new definition of residential property which is more helpful than the current definition:
‘Residential property is real property that is used, or intended to be used, for residential purposes but does not include real property that is used primarily for the purpose of industry, commerce or primary production.’
It would appear that:
- if the property currently includes a residence and is not primarily used for a commercial or farming purpose, it is residential property
- vacant land expected to be used for residential purposes under the planning scheme or a development approval is residential property unless actually used primarily for another purpose, and
- land sold subject to a development approval for residential use being obtained will be residential property unless current commercial or farming use will continue after settlement despite new DA.
The most likely issues to arise will be about the meaning of ‘intended to be used’.
Warnings and termination
The PAMD Form 30c warning statement and BCCM information sheet (Form 14) have both been abolished. Instead, for the sale of residential property, the contract must contain a set of prescribed words on the signing page immediately above where the buyer is to sign. Failure to comply does not confer a right of termination, and is an offence for the seller and can attract a penalty of up to $22,000. The buyer’s attention does not need to be directed to the warning paragraph or anything else.
Sensibly, there are exemptions covering auction contracts either at auction or with a registered bidder by 5.00pm on the second business day after the auction as well as instances where the buyer is a listed company or subsidiary, or the state or a statutory authority. The warning paragraph and cooling-off entitlement are also not required if the sale is of more than three lots to the same buyer at the same time.
Disclosure requirements currently dealt with by a Form 27c are basically unchanged, but now also apply to the building contract where the transaction is for a house and land package. The requirement for disclosure of commission remains, though maybe unintentionally, given explanatory notes to the bill.
There are detailed rules about the extent to which (or when) an agent can:
- disclose to the buyer a price (or price range) sought by the seller, or
- give a seller or buyer a price/value recommendation.
The answer to both is essentially never, or not without jumping through a bunch of hoops, some of which an agent likely will regard as ‘too hard’.