On 20 November 2013, the Queensland Parliament introduced real property reforms by drafting four Bills with an intention to replace the Property Agents and Motor Dealers Act 2000 (Qld) (‘PAMDA). These four pieces of legislation have since been passed:
- Property Occupations Act 2014
- Motor Dealer and Chattel Auctioneers Act 2014
- Debt Collectors (Field Agents and Collection Agents) Act 2014
- Agents Financial Administration Act 2014
The Office of Fair Trading has now released the new forms that will be used on their website and the Attorney-General and Minister for Justice Jarrod Bleijie MP has announced that the four Acts will commence on 1 December 2014
The purpose of a split in the legislation is to reduce excessive regulation and government involvement, without taking away from the necessary protection of consumers.
Property Occupations Bill 2013
Some changes which may particularly affect those who are intending to purchase and sell your property in later months of 2014, are those found in the Property Occupations Act 2014.
The Act regulates the occupations of those who work in the real property sector and it aims to achieve an appropriate balance between the need to regulate for the protection of consumers and the need to promote freedom of enterprise in the market place.
Of the more significant changes, is the new seller disclosure requirements. No longer is there a requirement to provide the buyer with several approved forms such as the Form 30c Warning statement, and the Form 27c Selling agent’s disclosure to buyer, in the specified way and order for there to be proper disclosure. Previously, under the PAMD Act a failure to comply with these statutory requirements gave rise to a right to terminate the contract. This Act will repeal the existing warning statements provisions and requirements in the PAMD Act. Instead, all that is required is for the seller (or their agent) to provide a simple prescribed statement in the contract and a failure to do this no longer grants a right to the buyer to terminate the contract; instead the only remedy is the imposition of a maximum penalty.
The PAMD Act provides that if a person wishes to waive the cooling-off period, they may only do so by providing the seller with a lawyer’s certificate in the approved form (Form 32a). This form provides that:
- The lawyer is independent of the seller, their agent and anyone else involved in the sale;
- The lawyer has not received, is not receiving and does not expect to receive a benefit for providing a service for the sale (other than the professional fees which the buyer incurs);
- The lawyer has explained to the buyer the effect of the relevant contract (and agreement to waive the cooling-off rights).
This form was thought to prevent a person from pressuring another into purchasing the property and providing the lawyer who acts on the buyer’s behalf with a benefit to assist them in their endeavors to unduly force the purchase. However, given our obligations under the Legal Profession Act 2007 the provision of this form seems futile as this Act already governs what is considered appropriate conduct regarding independence and we have a duty to not engage in a conflict of interest unless disclosure has occurred.
Furthermore, to require a specific form to be provided in the case of waiving the cooling off period would add to the buyer’s costs – they shouldn’t have to pay extra to waive a cooling off period.
For these reasons, after 1 December 2014 we will no longer be required to provide you with the lawyer’s certificate.
The Property Agents and Motor Dealers Regulation 2001 places a cap on commission that an agent is entitled to received for the purchase or sale of residential property, the letting of residential property, collection of rent for residential property and on the sale of a building for removal. Ordinarily the agent’s commission is negotiable so long as it does not exceed the prescribed cap. The limit on the amount of commission an agent may claim, was arguably justified by the fact that this was necessary to protect consumers. However, it has been found that it can result in a lack of competition between agents. The Act will remove the regulation of commission which may serve to promote competition in the marketplace and have the effect of bringing the commission down.
Agents must still ensure that they disclose any beneficial interest to the seller under the Act, however an agent may still seek commission if the seller has received notice of this beneficial interest and subsequently agrees to engage the agent’s services in the sale, notwithstanding the beneficial interest the agent has. Similar regulations currently apply to lawyers.
The Act also removes the requirement for an agent to disclosure to the buyer how much commission they will be receiving from the seller. Some would say this is a private contractual matter that does not concern the prospective buyer. We recommend that buyers take legal advice if they are concerned with any of these matters.
Sophisticated parties and residential property sales
The Act provides that the residential property sales provisions (including the statutory cool-off period and the required prescribed statement to be included in the contract) will not apply to certain kinds of contracts, which include:
- a contract involving a buyer who is a publicly listed corporation or a subsidiary of a publicly listed corporation;
- a contract involving a buyer who is the State or a Statutory Body; or
- a contract involving a buyer purchasing three (3) lots or more at the same time (even if not in the one (1) contract).
The reason for these provisions not applying to ‘sophisticated parties’ is that these kinds of entities do not need consumer protection provisions and it will reduce their costs in providing a statutory cooling off period and a warning statement in the contract to the buyers and an independent property valuation before signing.
There are many other provisions that will be amended particularly in relation to the appointment and term of agent. But those mentioned above are among the more significant ones. Therefore, it is important that you are aware of your disclosure obligations as the seller, the fact that your lawyer no longer has to disclose their interest in the sale (although their actions are still governed by the Legal Profession Act and Australian Solicitor Conduct Rules) and the amount of commission you may be required to pay. And for those who fall into the “sophisticated buyers” category the residential property sales provisions may not be applicable to you at all.
Our recent webinar on the recent developments in Queensland property legislation provides further details regarding these changes. The recording of this webinar can be accessed at no cost here.
For more information regarding Real Property Reforms
Please contact our Business Development Team or call us on (07) 3252 0011 to book an appointment with one of our specialist Commercial Lawyers today.