What’s changed?
The update aims to better align the REIQ Commercial Land and Buildings Contracts with the REIQ Residential Contracts which were revised in January this year. These changes are significant, and parties should be aware of the following key changes moving forward.
Right to extend the Settlement Date
A new provision has been included, allowing both parties to extend the Settlement Date by up to 5 business days after the scheduled Settlement Date, provided prior written notice has been given by the extending party.
This new clause responds to recurring difficulties for buyers unable to settle on time, in some cases leading to termination of the Contract and loss of significant deposits. This welcomed change to the previous “time is of the essence” position will alleviate the difficulties buyers face when affected by delays outside of their control, for example when a financier is unable to settle on the scheduled Settlement Date.
Accommodating electronic settlements
Electronic settlements in the post pandemic world are now commonplace. In response to this, the REIQ has introduced provisions to make electronic settlements more accessible. REIQ has now replaced all references to PEXA (Australia’s only electronic conveyancing platform) with references to electronic network operators generally. As the Australian Competition and Consumer Commission approves new electronic conveyancing entities, REIQ Contracts will not unfairly favour one provider over another.
Payment of deposit by direct debit
Buyers paying their deposit by electronic transfer are now provided with a grace period to accommodate the time taken for the funds to reach the Deposit Holder’s account. The Buyer must be able to provide evidence of the transfer being made before this date (i.e. by way of a payment remittance) to be able to rely on this deeming provision. A failure to produce evidence will entitle the Seller to terminate the Contract if the funds have not been received by the due date.
Amending the definition of the Contract Date
The definition of the Contract Date has been amended to accommodate electronic signing. In the event the Contract Date has not been inserted; this date will now be calculated as the date the last party signed the Contract.
Warranty in relation to communications from competent authorities
The Seller is now required to warrant that they have not received any notification from a competent authority (i.e. local council) that may result in the issue of a show cause/enforcement notice or a notice to carry work on the Property.
Services unrelated to land
A new provision now requires the Seller to disclose the presence of any services that pass through the land and that are not protected by any Encumbrance disclosed to the Buyer in the Contract. Sellers are encouraged to carry out a search with the relevant local authority to ensure compliance with this new disclosure obligation.
Moving forward
- It is important for parties to commercial property transactions to understand which version of the REIQ Contract is being used.
- If using the most recent editions, buyers and sellers are encouraged to seek legal advice to understand how the above changes may impact the overall commercial transaction, particularly in circumstances where settlement may be extended by up to 5 business days.
- Remember, the REIQ Contracts set out standard contract terms which can be amended by special conditions. Parties may include special conditions to change any of the terms to better suit their individual needs and circumstances.
If you have any questions about these changes or would like to find out more about how we can assist with your next commercial property transaction, please visit our solutions or get in contact with our team.