Property Occupations Act 2014 - Part One
This act which replaces the part of the Property Agents and Motor Dealers Act, dealing with Residential Property, comes into force on 1 December 2014. PAMDA will then cease to exist. PAMDA will continue to apply to contracts and listing agreements that were entered into before 1 December 2014.
Residential Property
The definition of residential property has been simplified and now reads:
Residential property is real property that is used, or is intended to be used, for residential purposes but does not include real property that is used primarily for the purposes of industry, commerce or primary production.
The previous definition talked about zoning and being in residential areas. This is an improvement however you may still have situations where you are not sure whether it is residential property.
If you are not sure, then you would use a residential contract which has the section about cooling off periods. This doesnt mean there is a cooling off period it simply says there may be a cooling off period.
Form 30C and Form 14 abolished
One of the great things about the new Act is the removal of these two forms. Instead you must insert the following paragraph just above where the parties sign the contract:
The contract may be subject to a 5 business day statutory cooling-off period. A termination penalty of 0.25% of the purchase price applies if the buyer terminates the contract during the statutory cooling-off period. It is recommended the buyer obtain an independent property valuation and independent legal advice about the contract and his or her cooling-off rights, before signing.
The important thing is for agents to make sure from 1 December that they use the updated REIQ or ADL contracts.
Cooling Off Period
The cooling off period will still apply however the number of exemptions has increased. A cooling off period will not apply in the following situations:
Contracts formed on a sale by auction.
Entered into no later than 5pm on the second clear business day after the property was presented at auction, with a registered bidder for the auction.
The buyer is a publicly listed corporation or is a State or a statutory body.
The buyer is purchasing at least three lots at the same time, whether or not in the one contract.
A contract which results from an option being exercised isnt a contract for the section if the parties are the same as those listed in the option agreement.
Option agreements are now included in the definition of contracts so all option agreements will need the paragraph set out above included in them, and a cooling off period will apply.
Waiving the Cooling Off Period
You no longer need a certificate from a solicitor to waive the cooling off period. A buyer simply needs to give a notice to the seller before they sign a contract stating that they are waiving the cooling off period.
We will be conducting in house training on the changes to the law and how to prepare the new listing agreements over the next couple of months. If your office is interested in Roland attending and providing this training please contact us 1800 632 394.