The Conveyancing Contract – Part 1
The key document in any conveyancing transaction is the contract. In Queensland, the most common contract for houses and residential land is the REIQ Contract for Houses and Residential Land, now in its tenth edition. If you are purchasing a unit or townhouse, the REIQ Contract for Residential Lots in a Community Titles Scheme (now in its sixth edition) will apply.
This article is the first in two that will step through and explain each part of the Contract for Houses and Residential Land. The Community Titles Scheme contract is very similar but contains extra parts relating to body corporate issues. Those extra parts will be explained in a later article.
To begin, we will walk through the reference schedule of the contract:
The date of the contract is the date that the last party signs the contract (i.e. normally the Seller). It is important for this date to be inserted as the conditions of the Contract such as the calculation for the building and pest date, the finance date and the settlement date are linked to the Contract Date.
This is usually the agent appointed by the Seller to sell the property.
This is the person or company that owns the property. The Seller’s details should match the Seller noted on the title search for the property.
The details of the Seller’s solicitor should be inserted if known.
The Buyer’s details must be inserted. If the Buyer is:
- an individual, the buyer’s full name must be inserted;
- a company, the ACN must also be inserted; or
- a trust, the name of the trust as well as the name of the trustee should be inserted, i.e. XYZ Pty Ltd ACN 000 111 222 as trustee for the XYZ Family Trust. The trust, i.e. the XYZ Family Trust is not a legal entity and therefore cannot be noted as the Buyer in its own capacity.
The Buyer’s solicitor’s details should be inserted if known.
The property address and real property description (i.e. Lot x on RP/SP xxxxxx) for the property must be inserted. The real property information can be obtained from a title search of the property. The area of the property can be obtained by searching for a plan of the property.
It is also important to insert the correct present use as the standard terms provides the Buyer with a termination right if the present use is not lawful under the relevant town planning scheme.
This section of the contract also confirms whether there are any chattels (i.e. loose property) included in the sale. If this section is not completed, the property is not sold with any chattels.
If any fixtures are to be excluded from the sale, they must be listed in this section otherwise they are automatically deemed to form part of the sale.
The purchase price is to be inserted together with details of any initial deposit and balance deposit. Unless amended the initial deposit is paid when the Buyer signs the contract. The balance deposit is often payable once the contract becomes unconditional.
If the contract is to be subject to the Buyer obtaining finance, this section must be completed. If this section is not completed or is incomplete, the contract is not subject to finance. Quite often the finance amount and financier are simply noted as “Buyer’s Choice” reflecting that the Buyer has not yet appointed a financier or is unsure of the amount that will be financed.
Building and/or Pest Inspection
If the contract is to be subject to the Buyer obtaining a building & pest inspection report for the property, this section must be completed. If this section is not completed or is incomplete, the contract is not subject to the Buyer being satisfied with the outcome of the building & pest inspection of the property.
Matters Affecting Property
If there are any encumbrances such as easements which will not be released at or prior to settlement they must be disclosed. You must specifically refer to the registered dealing number for the encumbrance (obtained from the title search) and not state “refer to title”. If there is an encumbrance affecting the property and it is not disclosed in this section, the Buyer may have rights of termination.
If the property is tenanted, the tenant’s details and the terms of the lease must be disclosed at this section. If the tenant is vacating the property prior to settlement and the property is being sold with vacant possession then this section does not need to be completed. The managing agent’s details should also be noted here.
If there is a pool located on the property, the Seller must disclose whether or not a pool safety certificate exists. If a pool safety certificate does not exist, a notice of no pool safety certificate must be provided to the Buyer prior to the Buyer entering into the contract. The contract will then be subject to a Pool Safety Certificate issuing by the Pool Safety Inspection Date. This date must also be inserted in this section.
Electrical Safety Switch and Smoke Alarm
The Seller must disclose if an approved safety switch and a compliant smoke alarm is installed in the property. Failure to install a compliant smoke alarm is an offence under fire safety legislation.
The Seller should conduct a search of the tree orders register and complete this section. This section discloses whether or not the property is affected by an order made by the Queensland Civil and Administrative Tribunal in relation to a tree on the property.
Any contract terms that are contrary or additional to the standard conditions are inserted here. In a future article, we will discuss in more detail the typical clauses inserted here.
The settlement date and the place for settlement are inserted here. In Queensland the settlement date is extremely important because this is the fixed date for settlement unless the parties agree to extend the date. While the place for settlement is less important, consideration should be given to the most convenient location for settlement in light of the parties’ and their lawyers’ locations.
Finally, the Buyer and the Seller should each sign the contract in the presence of an unrelated adult witness, and the deposit holder (usually the agent) should also sign to acknowledge receipt of the initial deposit.
In the next article we will look at the fine print, the standard terms of the contract, and how these affect your rights as a buyer or seller.
Ordinarily, the Seller’s agent will prepare the contract however before signing (whether you are a buyer or a seller) we recommend that you have the contract reviewed by a lawyer. To get advice from our expert conveyancing lawyers, please call Certus Legal Group on 07 3106 3016 or contact us using the form on this page.
This article does not give legal advice and should not be relied upon as such. It is intended to provide general and summary information on legal topics, current at the time of first publication. You should seek professional legal advice before acting or relying on any of the content contained herein.
The images of the REIQ Contract for House and Residential Land Tenth Edition are the copyright of the REIQ.