The Property Occupations Bill 2013 was passed by Parliament last month on 7 May 2014. The new Act will commence on a date to be proclaimed, although this is expected to occur in the next several months.
The Property Occupations Act is one of four proposed Acts which will collectively replace the cumbersome Property Agents and Motor Dealers Act 1994 (PAMDA). This particular Act relates specifically to the parts of PAMDA governing the sale and leasing of residential property.
What has changed?
The primary practical changes for residential contracts are:
- The Form 30C warning statement for residential property sales is abolished. Instead, the following paragraph must be included in the contract itself above the place where the buyer signs the contract.
‘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.’
- Failure to comply with the disclosure requirements under the new Act does not give the buyer a statutory right of termination, although it is an offence for the selling agent.
For further information, please see our previous article on the Bill here.
As with PAMDA, cooling-off period rules apply to ‘relevant contracts’ for the sale of residential property. This definition has been made clearer in the new Act and includes contracts for the sale of residential property, but excluding:
- contracts formed by auction (or contracts entered into by a registered bidder by 5pm on the second business day after a property was passed in at auction);
- contracts formed under exercise of an option to purchase where the parties to the contract are the same;
- contracts where the buyer is a publicly listed corporation or a subsidiary;
- contracts where the buyer is the State or a statutory body; and
- contracts where the buyer is purchasing at least 3 lots at the same time (whether or not they are included in the same contract).
“Residential Property” is then defined in the Act as: “Real property that is used, or is intended to be used, for residential purposes but does not include real property that is used primarily for the purposes of industry, commerce or primary production.”
Perhaps of most significance to owners of residential property looking to sell is the removal of the cap on commissions payable to agents.
Currently, the Property Agents and Motor Dealers Regulation 2001 prohibits agents from charging commission of more than 5% on sales under $18,000 and for sales above $18,000 agents must not charge more than, $900 plus 2.5% of the part of the sale price which is above $18,000.
Under the new Act, there is no such restriction.
Preparing for the change over
Any contracts entered into before the Act commences will continue to be governed by PAMDA. Contracts entered into after the effective date will need to be compliant with the Property Occupations Act. Agents and legal practitioners alike will need to take care to ensure that the contract used is compliant with the applicable Act.