Currently the Property Agents and Motor Dealers Act 2000 (Qld) (“PAMDA”) details a complex process which must be followed by sellers when producing and signing contracts for residential property. It requires one or more approved forms to be attached to a contract when it is delivered to a buyer and a failure to comply with this may provide the buyer with termination rights.
The repeal of the PAMDA is aimed at simplifying the contract process and reducing the level of red tape and regulation imposed on the property industry. By reducing red tape, it is hoped that more people will be encouraged to buy, sell and manage property and consequently, the property industry in Queensland will be stimulated.
Four pieces of legislation will replace the current PAMDA legislation, however for the purpose of this article, I will be focussing on the Property Occupations Act 2014 which was passed by Parliament on 7 May 2014 with a commencement date expected later this year.
The key changes which may affect you as a buyer or seller of residential property are detailed as follows:
- Simplified Contractual Procedures – Contracts will no longer be required to have the warning statements (the PAMDA 30c and BCCM Form 14 Information Sheet) attached to the contract. Instead of the buyer’s attention being drawn to the warning statement, a short advice must be included in the contract immediately above where the buyer signs the contract. The advice must state “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”
- No Termination Rights- The buyer will no longer have termination rights if their attention is not drawn to the warning statement or advice. Instead, the penalty for noncompliance will be a fine imposed on the seller of up to $22,000.00 (for an individual) or up to $110,000.00 (for a company)
- Exclusions of Cooling Off Period – Whilst the 5 business day cooling off period will continue to apply to the majority of contracts, an exemption for “sophisticated parties” has been introduced. This means that if a buyer is buying 3 or more lots at the same time or is a listed public company/subsidiary or is a government/statutory body, then the cooling off period will not apply to those contracts. A contract formed at auction will continue to exclude a cooling off period, however if a registered bidder at the auction signs a contract within 2 business days after the property was passed in at auction, then that contract will also not be subject to a cooling off period
- Shortening/waiving Cooling Off Period - The requirement to provide a solicitors certificate to shorten or waive the cooling off period has been removed. Instead, a buyer may shorten or waive the cooling off period by written notice to the seller
- Selling Agent’s Disclosure – The selling agent of a property will no longer have to provide the buyer with a statement (currently a PAMDA Form 27c) which discloses how much commission they will receive from the sale. Furthermore, the cap on agent’s commission will be abolished and on that basis it is important that a seller negotiates the level of commission the agent will receive before any appointment. In regards to properties sold at auction, an agent may disclose the fact that a reserve price has been set, however is prohibited from disclosing the actual reserve price itself
It is expected that the above changes will make the buying and selling of residential property a lot simpler. By eliminating a lot of the strict process requirements regarding the manner of presentation of the contract and attaching particular forms, sellers can seek comfort in the fact that a buyer can no longer terminate a contract merely because of the way a contract was assembled or the words used by the seller when referring to these additional attachments. At the same time, buyers have retained their rights to change their mind and have the benefit of a cooling off period.