Jeremy Streten – Legal Practice Director
Recent changes to Queensland property law will begin to take affect this year, altering the way that many real estate agents operate their business. The changes have the potential to affect clients in a number of ways, and individuals or businesses looking to engage with real estate agents this year should make themselves aware of how regulations are changing, and what this could mean for them.
In May 2014, the Queensland Government passed legislation that will split the Property Agents and Motor Dealers Act into four separate pieces of legislation:
- Property Occupations Act 2014;
- Motor Dealers and Chattel Auctioneers Act 2014;
- Debt Collectors (Field Agents and Collection Agents) Act 2014; and
- Agents Financial Administrative Act 2014.
The main reason for the change is to create a simpler system and to help businesses while maintaining appropriate protections for consumers.
What will change?
The main changes for the real estate industry are sevenfold. They include deregulation of commissions, changes to the warning statement, changes to appointments, changes in categories of licences, changes in beneficial interest sales, the abolition of the lawyer’s certificate in waiving cooling off periods, and changes to auction laws.
Deregulation of commissions
For some time agents have been restricted to charging a maximum amount of commission on sales of residential properties. Without this regulation consumers and agents will be able to negotiate the commission and other fees payable with their clients.
The requirement to disclose those fees to the seller prior to their appointment as agent for the sale of the property does not change, however there is no longer a need for agents to disclose their commission to the buyer of the property prior to the sale.
Changing the warning statement
Following the introduction of the form 30c Warning Statement, a number of issues emerged surrounding the form not being properly attached to the contract prior to it being signed by the buyer. Changes to legislation will require there to be a prescribed statement included in the contract itself, which must be:
- Clear, obvious and legible; and
- Directly above the space for the buyer’s signature.
As of yet this change has not been determined, however we will advise as soon as the actual changes are known.
Changes to Appointments
Primarily, the maximum term for a sole or exclusive real estate agency will change from 60 to 90 days. In the case where a seller appoints an agency for 90 days, they can choose to terminate the appointment after 60 days.
There will also now be one simplified form for clients to appoint a property agent, replacing the seven forms that currently exist.
Again, at the time of writing this article the prescribed form is yet to be released. Updates will follow.
Beneficial interest sales
Restrictions will also be put on agents charging where they will benefit from a particular sale. Legislation changes will provide that an agent must:
- Act fairly and honestly in relation to the sale;
- Make sure the seller knows about their beneficial interest; and
- Ensure that the seller signs a form to confirm that they understand and agree to the sale.
Abolition of the lawyer’s certificate in waiving cooling off periods
A cooling off period will remain for 5 business days after a contract is entered into for the purchase of a residential property. This, however, will not apply to contracts:
- Formed at auction;
- Entered into by no later than 5pm on the second clear business day after the property was passed in at auction if it is sold to a registered bidder;
- Formed because of the exercise of an option granted under an earlier contract if the parties are the same; and
- Where the buyer is purchasing at least 3 lots at the same time (whether or not they are in the same contract).
The requirement for a buyer to see a lawyer to waive a cooling off period has also been abolished, meaning that agents and buyers will not have to wait for a solicitor to become available before the cooling off period is waived.
Changes to Auction laws
Where a sale is at an auction, the agents may disclose that they have a reserve price for the property, however they must not disclose the reserve price itself.
Categories of licences
Changes will be made to the categories of licences that can be held. This includes:
- Property developers will not need a licence;
- Auctioneers will need a auctioneers licence under the new legislation; and
- The trainee auctioneer licence has been abolished.
These changes are still in formative stages and the State parliament is yet to release any regulations or prescribed forms. To stay up to date with the latest developments in these legislation changes, subscribe to our new Real Estate Newsletter dedicated specifically to tracking developments in the PAMDA: