Is Time of the Essence – the new extension clause in REIQ Residential

The new edition of the Contract for Houses and Residential Land (17th ed.) and Contract for Residential Lots in a Community Title Scheme (13th ed.) were released late January of this year, and already the property world is buzzing. One of the biggest amendments to the contract terms, is under clause 6.2 the new ability of either party to obtain an extension for up to 5 working days if they are unable to settle due to delay or inaction of the Financier. More than one notice can be given but settlement must not be more than 5 business days from the original date.

In an obvious response to the media coverage of the incident in late 2021, where a retired couple claimed the deposit (a significant $65,000.00) on a young first home buyer couple who were unable to settle as a result of the Financiers delay, the Real Estate Institute of Queensland in collaboration with the Queensland Law Society have attempted to ameliorate what some would consider the harsh reality of our “time is of the essence” provisions.

This brings Queensland contracts (well, REIQ residential contracts at least) in line with the position in other states in Australia. Victoria for example, allow for a ‘default notice’ to be served on the Buyer if settlement does not occur as scheduled, giving them 14 days to remedy the default (on payment of penalty interest). The new clause in the REIQ residential contracts grants a unilateral right to an extension of up to 5 Business days, provided it is exercised prior to 4:00pm on the Scheduled Settlement Date. There is no limitation on the number of extensions that can be requested, provided the cumulative time does not exceed the 5 Business Days.

There are some questions being raised in the aftermath of the release of these amendments however, as to who should bear the additional legal costs of extending the settlement and whether these provisions can be contracted out of. What it does make clear is that if settlement timing is important for you (for example, in a situation where you are Buying a property and Selling a property simultaneously or need to book removalists and the like) a review of the contract prior to signing is critical to ensure your interests are protected and youunderstand the possible outcomes of the contract you are entering into.

The New REIQ contract also adds clauses about smoke alarms, pool compliance, payment of deposits by direct transfer, new sellers warranties on enforcement notices, services passing through the land which do not have an easement and new definition of the Contract date to address signing electronically.

Please contact our team at Perspective Law for assistance in all your Property matters at Tony.Crilly@perspectivelaw.com or Katherine.Blood@perspectivelaw.com   

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