An end to what one Queensland judge has described as the magic spells in the “PAMDA book of incantations” is a step closer with the introduction into Queensland Parliament of the Property Occupations Bill 2013 (POB). With the key objectives of cutting red tape and improving the operation of the legislation, this will be welcome news for all players in the property industry.
10 key changes for developers
The underlying concept of providing consumer protection to purchasers of residential property through a cooling off period has been retained. However, the procedure for signing up contracts and the consequences of making errors have been relaxed.
- Simplified contractual procedures
The POB will do away with the requirement for warning statements (PAMD 30C and the BCCM Information Sheet) to be attached to the contract. Instead contracts for the sale of residential property prepared by sellers or their agents will be required to include a short advice immediately above the place the buyer signs the contract.[i]
There will no longer be a requirement to draw the buyer’s attention to the statement.
- No termination right
Significantly, buyers will not have a right to terminate a contract if the advice is not included (or is in the wrong place). The penalty for non-compliance will be a fine[ii].
The cooling off period still won’t apply to contracts formed on the fall of the hammer at auction. However, this has been extended to contracts entered into within two business days of the auction, as long as the buyer was a registered bidder at the auction.
- Additional carve outs
In addition, the cooling off period won’t apply to “sophisticated party transactions”, that is, where the buyer is:
- the government or a statutory authority
- a listed public company or its subsidiary
- buying 3 or more lots at the same time.
- Waiving and shortening the cooling off period
The procedure for waiving or shortening the cooling off period will be simplified. Under PAMDA a buyer could only waive or shorten the cooling off period by producing a legal advice certificate given by an independent lawyer. Under the POB, a buyer will be able to waive or shorten the cooling off period by giving a written notice to the seller.
POB will clarify the current uncertainty around options to purchase. The requirement for the advice and the cooling off period will apply to options but not to the contract where the grantee exercises the option. However (in the absence of a waiver notice) a cooling off period will apply where a third party buyer (usually referred to as a “nominee”) exercises the option.
- Notice for vacant non-residential land
The requirement for an agent to give a prospective buyer a notice where vacant land being sold is not currently zoned for residential purposes will be removed.
- Developer licences
The requirement for a property developer (defined as a person who sells more than six properties in a 12 month period without involvement of an agent) to obtain a licence will be removed. However, the requirement for deposits in developer sales to be held in a trust account has been retained.
- Resident letting agents
The residency requirement for a resident letting agent’s licence (that is, the requirement for the agent to personally live on site) will be removed. This will enable licence holders to own the management rights in more than one building. The requirement to have body corporate approval before obtaining a licence (which is problematic, particularly for off-the-plan developments where the body corporate does not exist until the building has been completed and titles issued) will also no longer apply.
- De-Regulation of commission
The cap on agents' commission on residential property sales will be abolished in line with NSW and Victoria.
The POB has been referred to the Legal Affairs and Community Safety Committee for consideration. The Committee is required to report to Parliament by 24 February 2014. We would expect the POB would be passed shortly afterwards and come into effect by mid-2014.