Updates to standard REIQ property sale contracts: June/July 2018
27 June 2018
(originally posted 19 June 2018 - amended below)
New editions to be released
QLS and the Real Estate Institute of Queensland are preparing new editions of the standard contracts:
- As a result of the GST withholding at settlement measures taking effect from 1 July 2018;
- To facilitate the signing of the contracts by electronic means; and
- To update references to legislation and notice clauses.
The comparison tables summarise the changes to the new editions.
Further information about the GST withholding at settlement measure is available at the Australian Taxation Office website.
Lexon will be updating the Conveyancing Protocol and Risk Tools in relation to the GST withholding measures.
Overview of key changes to Residential House & Land Contract (15th edition):
- Reference Schedule updated with a new part for the GST withholding at settlement measures taking effect from 1 July 2018
- Buyer must answer the question “Is the Buyer registered for GST and acquiring the Land for a creditable purpose?” and warrants that this information is true and correct, in clause 2.5(6)
- The Seller gives notice to the Buyer in accordance with section 14-255(1)(a) of the Withholding Law (Taxation Administration Act 1953 (Cth) Schedule 1) that the Buyer is or is not (select whichever is applicable) required to make a payment under section 14-250 of the Withholding Law in relation to the supply of the Property. If the Withholding Law applies, under section 14-255(1) of the Withholding Law, the Seller is required to give further details prior to settlement.
- A warning has been added to advise that “All sellers of residential premises or potential residential land are required to complete this notice. Section 14-250 of the Withholding Law applies to the sale of ‘new residential premises’ or ‘potential residential land’ (subject to some exceptions) and requires an amount to be withheld from the Purchase Price and paid to the ATO. The Seller should seek legal advice if unsure about completing this section.”
- Signature panels are updated to include changes facilitating the parties executing the contracts by Electronic Signature
- Footer of contract updated to provide that initials not required if signed by Electronic Signature
- New definitions added to clause 1.1 of “ATO”, “Electronic Signature” and “GST Withholding Amount”
- Definition of “CGT Withholding Amount” amended to replace “s” with “section”
- Definition of "Essential Term" amended to include clause 2.5(5) being an essential term for both Buyer and Seller.
- References throughout the contract to “Deputy Commissioner of Taxation” are amended to “Commissioner of Taxation”.
- New clauses 2.5(5) and (6) in relation to the GST Withholding Amount process – please note that clause 2.5(5) has been amended since original drafting release on 19 June 2018.
- Update to clause 7.6(4) to refer to the Planning Act 2016
- New clause 7.7(e), added following the High Court decision of Pike v Tighe  HCA 9. The High Court held that planning and development conditions (as part of a development approval) attach to the land and are enforceable against subsequent owners. This will include the obligation to grant an easement in favour of another property. New clause 7.7(e) will allow a buyer to terminate the contract if compliance with an outstanding planning condition will result in an interest in land being created. The right to terminate arises if the interest in land is material according to the test in clause 7.5.
- Amendments to clause 10.4 Notices:
Practitioners should note the following differences to the approach in the 14th edition:
- A notice sent by post will be treated as given 5 Business Days after posting. (The current provision deems the notice as given after 3 business days)
- A new deeming provision for email was added. A notice sent by email will be treated as given at the time it is sent (unless sent between 5pm on a Business Day and 9 am on the next Business Day, in which case it is treated as given at 9 am on the second Business Day). An email is sent when the email leaves the mail server of the sender.
- A notice under the contract or statutory notice will be properly sent by email if the notice or information required to be included in the notice is contained within an email, as an attachment to an email or located in an electronic repository (such as Dropbox or DocuSign) accessible by the recipient by clicking a link in an email.
- A new clause 10.10 provides for the contract to be signed in counterparts and for a counterpart to be in electronic form.
- Amendments to clause 11.3 to reflect new clause 2.5(5) – please note that clause 11.3 has been amended since original drafting release on 19 June 2018.
- A new clause 12 provides the consent of the buyer and seller to execution of the contract in electronic form with an electronic signature. Clause 12 satisfies the consent requirements for application of the Electronic Transactions (Queensland) Act 2001. Clause 12.2 ratifies the use of electronic communication for pre-contract disclosure at law or under statute.