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New REIQ contracts for e-settlements in Queensland
The Real Estate Institute of Queensland (REIQ), in conjunction with the Queensland Law Society, have recently updated the REIQ residential house and land contracts to the 11th edition and the REIQ residential contracts for lots in a community titles scheme to the 7th edition.
This is the second round of changes to the REIQ contracts since the introduction of the Property Occupations Act 2014 (Qld) on 1 December 2014. The new REIQ contracts incorporate a new clause 11 covering e-settlements through PEXA, which is due to commence in Queensland. Clause 11 of the new REIQ contracts only applies if all parties to the contract (including financiers) agree to an electronic settlement through PEXA; otherwise settlement will occur through the existing paper based system.
Some of the important changes in the new REIQ contracts include:
- Land tax: land tax is no longer adjustable at settlement. This change recognises that majority of buyers under the REIQ contracts are buying a place of residence and would not be liable for land tax. If the sellers require land tax adjusted at settlement, this should be dealt with in a special condition to the contract;
- New settlement time: settlements must now occur between 9:00 am and 4:00 pm AEST (not 5:00 pm) as settlements must occur by 4:00 pm AEST in PEXA;
- Digital lodgement and payment: digitally signed transfers and releases are acceptable in the PEXA system and the balance purchase price can be paid electronically;
- Escrow and undertaking requirements: the seller’s solicitors are required to hold any documents that cannot be lodged electronically and keys in escrow and undertake to provide them to the buyer after settlement;
- Rights of termination: any rights of termination under the contract cannot be exercised once the PEXA workspace is ‘locked’ (at the nominated time for the e-settlement);
- Computer failure: if an e-settlement does not occur by 4:00 pm due to the PEXA, land registry, office of state revenue or a financial institution being inoperative then neither party is in default and settlement is extended to the next business day; and
- Opting out of PEXA: a party may elect to opt out of e-settlement for any reason up to 5 business days before settlement.
The recent changes have modernised the standard terms of contract in anticipation of the PEXA launch in Queensland. We would be happy to discuss any specific concerns or queries you may have.Elicia Lin