An Introduction to Real Estate Forms Queensland Australia

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An Introduction to Real Estate Forms
        Queensland Australia

Contents

Residential Sales Forms Queensland Australia _______________________ 1
  Property Appraisal __________________________________________________________ 1
  Comparative Market Analysis __________________________________________________ 3
  Form PAMD 22a Appointment of Real Estate Agent (Sales and Purchase) __________________ 4
  Form PAMD 27c Selling Agent‟s Disclosure to Buyer _________________________________ 4
  Form PAMD 30c Warning Statement _____________________________________________ 5
  Contract (For Houses and Land) ________________________________________________ 6
  Clauses Made Simple _______________________________________________________ 17
  The Real Estate Dictionary ___________________________________________________ 20
Property Management Forms___________________________________ 21
  Form PAMD 20a – Appointment of Agent (letting and property management) ______________ 21
  Form 1a - Entry Condition Report - General Tenancies _______________________________ 21
  Tenant Enquiry Form _______________________________________________________ 22
  Application for Residential Tenancy _____________________________________________ 22
  Form 2 - Bond Lodgement ___________________________________________________ 23
  Form 17a - Information Statement - Renting in Queensland ___________________________ 24
  Form 18a - General Tenancy Agreement _________________________________________ 24

Residential Sales Forms
Queensland Australia

Property Appraisal
The asking price of a property will directly affect the amount of enquiry generated, the time
spent on the market and the ultimate sale price achieved. You must establish the price range
in which the property can reasonably be expected to sell. You must be confident that the
price range will be attainable, and you must do everything possible to establish a realistic
asking price.

Appraisal is not an exact science, but it is an objective, logical and professional process. Your
appraisal helps the seller set a price range based on the interpretation of present market
conditions and the facts we have at hand.
We need to understand that it is not us that sets the price of a property; we simply interpret
what the market place indicates is a likely selling range. In the end, it is the seller and buyer
in negotiation who put the final selling price on any real estate transaction. There are four
principles of an appraisal to consider:

 Cost: the amount the seller paid for the property, plus any improvements they've made.
 Price: the amount they'd like to ask when they put it on the market.
 Value: what one person might pay for the property, and is the market value to them.
('Beauty is in the eye of the beholder').
 Market Value: the amount that would appeal to many people to affect a sale in a
reasonable period of time.

Remember that you are a real estate sales consultant, not a registered valuer. Should the
seller request a valuation, encourage them to obtain one from a registered valuer. Your CMA
is an appraisal only, not a registered valuation.

Every appraisal must have a 'disclaimer clause'. This states:

This document is an appraisal only, and may not be construed to be a registered valuation.
Should you require a registered valuation, we recommend you obtain a formal valuation from
an independent registered valuer.

Where to find the information to formulate your appraisal:
 Real Estate Institute records.
 Valuation statistics (all sales, including private sales, submitted by solicitors).
 Multi-listing records (where applicable).
 Your office's records.
 Talking to fellow sales consultants, valuers and your manager.

List these results on your market appraisal. Inspect available properties if possible, to ensure
you are capable of discussing this sector of the marketplace relevant to your seller‟s
property.

Factors that affect market value are
 Desirability
 Utility (how practical is this home?)
 Scarcity (not many choices for buyers?)
 'Purchase-ability' (is finance readily available?)
 Economic conditions
 Urgency of sale (what is the seller's motivation?)
 Location
 Quality presentation and condition.

Obtain as much information as possible before completing your market appraisal
 Do a title search, if appropriate.
 Get the rating details from the council or a rate roll in your office.
 Has anyone in your office marketed this property before?
 Has anyone in your office done a market appraisal on a similar property in this area?
 Where are the local shops, schools, buses, churches, etc.?
 Do you have the correct address?
 Have there been any relevant recent sales? What properties in the area have sold in the
last six months? Have any homes been withdrawn from the market?
 Are there any properties on the market likely to be competition? How many homes in the
area are for sale? Do many or only a few homes come on the market in the area?
What‟s the average selling price and activity level in the neighbourhood?

Who can do appraisals?

All sales staff must learn to put together professional appraisals. However, sales consultants
with less than six months experience are not permitted under any circumstances to sign an
appraisal without their manager's approval.

Comparative Market Analysis
The quality of the comparisons you use in your Comparative Market Analysis (CMA) is much more
important than the quantity. Equally important is your ability to discuss the comparisons with
assurance and confidence. In most cases this means seeing a comparison home before you discuss
it with a seller.

A CMA can contain three groups of comparable properties.

1. Recent Sales
Do not focus just on the sale price, but rather on what it offered by comparison. In your CMA offer
just a few comparisons, not too many. It is best to limit your list to between four and eight
comparison properties. It should fill one sheet and give the following details:
 the address
 selling price
 month of sale and
 brief description of the property's features.

2. Current Competition
 Comparable properties currently for sale in the area.

3. Failed to sell
 Comparable properties in the area that have been for sale for a long period of time or have been
withdrawn from the market without selling.

Each property should be comparable to the seller's. Better still is a visual CMA, which shows:
 photos of similar properties
 details
 listing price versus confirmed sale prices.

Do not put a recommended asking price or likely selling price range on your CMA. (If you're using a
form that has a place for it, leave it blank). Once sellers have seen and discussed the comparisons
they can make their likely selling and asking price decisions themselves.

What factors do you compare to another property?
 age
 condition
 construction (method of construction, number of bedrooms or bathrooms, style, layout, utilisation
of space)
 size
 location, part of town
 access, vehicle accommodation
 view, setting (plus land size, landscaping)
 chattels (plus amenities & extras)

Similar capitalisation rate ('Cap Rate') - for investment properties only.

Form PAMD 22a Appointment of Real Estate Agent (Sales and Purchase)
            Property Agents and Motor Dealers Act 2000
            This appointment form is to be used to appoint a real estate agent to perform a service for a client on
            real estate transactions, such as selling property or acting as a buyer's agent. This form must be
            completed and a copy given to the client before the agent performs any service for the client.

            Failure to get a signed Listing Authority may jeopardise your receiving commission as the seller is not
            legally obligated to pay if the authority to list is not in writing and signed.

            It must be accurate, detailed, and complete, and you must get the seller to read through it, confirm
            the details before they sign it, and then ask for their signature.

            Obtain all parties' signatures on the listing authority. A copy of the Listing Authority must be given to
            the seller/s at the time of signing.

            What you must say at the time of listing in conjunction with another agency:
            Before accepting an appointment to sell property for a client, a real estate agent must:
                 explain to the client general issues about a sale conducted in conjunction with other agents (a
                  “conjunction sale”), and the issues about a conjunction sale relevant to the particular sale if it
                  were to be a conjunction sale; and
                 disclose to the client the agent‟s policy about conjunction sales, including the percentage
                  apportionment of commission between the agents.

            If you express and opinion on price:
            Advice about market price or rent:
                 A real estate agent, in attempting to obtain an appointment to sell, buy, exchange or lease
                  property, must not knowingly mislead a person about the property‟s market price.
                 If a real estate agent gives a person an opinion about the market price or market rent for a
                  property, the agent must not accept instructions from the person to act as a real estate agent for
                  the property unless the agent has given the person a written statement of the material facts that
                  the agent has taken into account in forming an opinion about the property‟s market price or
                  market rent.

            Form PAMD 27c Selling Agent’s Disclosure to Buyer
            Property Agents and Motor Dealers Act 2000
            The Selling Agent must complete the Selling Agent's Disclosure to Buyer form. It must be completed,
            handed to and acknowledged by the buyer before the contract for sale of residential property
            is entered into.

            On this form, you must tell buyers what kind (if any) relationship you have with anyone you refer the
            buyer to for professional services, whether you expect to receive any benefits from the service
            provider as a result of the referral and how much you expect it to be. Property developers must
            additionally disclose if you own at least 15% interest in the property you're selling.

            Please read the instructions at the end of the form for more specific information about what must be
            disclosed.

Copyright © 2007 - Harcourts International Ltd
An Introduction to Qld RE Forms – v29Sep09                       - 4-

Form PAMD 30c Warning Statement
            Property Agents and Motor Dealers Act 2000
            The Warning Statement must be read and signed by the buyer before he/she enters into the contract.
            The Warning Statement:
                 informs the buyer whether a cooling-off period applies;
                 advises buyers of their rights under the contract, including when the cooling-off period starts and
                  ends;
                 alerts buyers to matters that require serious consideration before they sign the contract;
                 advises buyers to seek independent legal advice and a valuation before signing a contract and
                  provides contact details on how to do that;
                 informs buyers that if they terminate the contract during the cooling-off period, they will be
                  refunded their deposit less an amount up to 0.25% of the purchase price of the property;
                 provides special warnings with regard to house and land packages;
                 advises buyers if the seller is a developer the buyer cannot claim against the Claim Fund in the
                  event of a financial loss, but can seek redress directly with the developer; and
                 advises buyers if they are purchasing property for the purposes of investment that special
                  requirements apply if they intend to make a Claim.

            Contracts that are entered into which do not have a Warning Statement, or contain a Statement that is
            not in the approved form will be of "no effect".

            When both parties agree to communicate via electronic means, the agent or seller must provide the
            following:

                 a covering email or fax that draws the buyer's attention to the documents below;
                 the mandatory warning statement (PAMD Form 30c) as the first page;
                 the information sheet (if for a unit);
                 the contract (proposed or signed);
                 a disclosure statement (if for a unit);
                 then any other documents (when faxed);
                 if emailed, additional documents must be sent in a separate file or folder attached.

            To avoid any confusion and to clarify the meaning of the statement contained in the IMPORTANT
            INFORMATION attached in page 2 of this form regarding "When does the cooling-off period end?"
            please note the following:

            The cooling-off period ends on the fifth business day after the cooling-off period commences. The
            business day that the cooling-off commences is counted as the first day of the period and the
            following four business days are counted for the cooling-off period to end at 5pm on the 5th business
            day.

            Examples:
                  1. Buyer receives a copy of a residential property contract signed by both the buyer and seller at
                     any time on a Wednesday (being a business day). The cooling-off period would end at 5pm
                     on Tuesday of the following week (assuming no public holidays in between).
                  2. Buyer receives a copy of a residential property contract on a Saturday signed by both the
                     buyer and seller. The cooling off period commences on the following Monday and ends at
                     5pm on Friday in the same week (assuming both are business days and no public holidays
                     intervene.

Copyright © 2007 - Harcourts International Ltd
An Introduction to Qld RE Forms – v29Sep09                        - 5-

Contract (For Houses and Land)

If the seller or the seller's agent is faxing documents, they must ensure that they are sent in the
following order:

1. Single page fax cover sheet containing a clear statement directing the buyer's attention to the
documents listed below;
2. The mandatory Warning Statement (PAMD Form 30c);
3. The mandatory information sheet if it is for a unit sale;
4. The relevant contract / proposed relevant contract;
5. The disclosure statement if it is for a unit sale, if not already provided;
6. Any other documents.

If emailing the seller or seller's agent must:

 send a message directing the buyer or the buyer's agent's attention to the documents listed
below;
 place the documents below in the following order in one file:
1. The mandatory Warning Statement (PAMD Form 30c);
2. The mandatory information sheet if it is for a unit sale;
3. The relevant contract / proposed relevant contract;
4. The disclosure statement if it is for a unit sale, if not already provided; and
 send any other documents in a separate file or folder.

If physically handing the contract / proposed contract to the buyer, the Warning Statement must be
attached as the top or front sheet of the contract. In the case of a unit sale, the information sheet is to
be attached between the Warning Statement and the contract. Additionally, the seller or seller's agent
must now also direct the buyer's attention to the Warning Statement and information sheet (if a unit
sale).

If posting the contract, the Warning Statement must be attached as the top or front sheet of the
contract. In the case of a unit sale, the information sheet must be attached between the Warning
Statement and the contract. Additionally, the seller or the seller's agent must now also enclose a
statement directing the buyer's attention to the Warning Statement, the information sheet (if a unit
sale), and the contract / proposed contract.

Please refer to „Guide to Contracts‟ document for a detailed guide for completing a contract.

Guide to the REIQ Contract
(For Houses and Land) Edition Five
Queensland Law Society

A guide for completing the Contract for Houses & Land (as published by The Real Estate Institute of Queensland)

Contract Date
Insert the date when the last party signs the contract. Eg: 2 March 2000

Note: This may not be the same date as the deposit is paid. In practice, the date on the contract is
often the date the agent signs to acknowledge receipt of the deposit. It should be the date the last
party signs the contract. The deposit may be paid later.

When preparing a contract for signing, the contract should not be dated and this section should
remain empty.

Agent
The selling agent‟s name, address, telephone, facsimile and email details should be included. You
should also include the Agents ABN and Licence number.

Note: this is the name of the business, not the individual sales representative‟s details.

Eg: Harcourts Real Estate, 30 Happy Street, Pleasantville

If agents are selling in conjunction, they need to be sure their names are on the contract, or they
could miss out on commission. They must both make sure they each has an authority to sell. There is
no requirement to indicate the commission split between agents as this is a separate agreement.

Parties
Details of the Seller and Buyer and their respective solicitors are required. This is to identify the
parties and provide addresses for service of notices.

It is extremely important to get the names of the purchasers right first time. Adding or changing
names at a later date can change the contract and incur extra stamp duty.

It is also important that the agent uses the actual street address and not the postal address. A postal
address is handy for the serving of notices and should be clearly indicated as such.

It is also important that the agent makes reference to the actual solicitor who will be representing the
buyers/sellers in the section marked “ref”.

A facsimile number and email address will also help expedite the conveyancing process. Eg:

Seller: John Henry SMITH and Janice Irene SMITH
21 High Street, Clareville QLD 4798
T: 3278 0034 F : 3278 0012

Solicitor: Jones and Co, 10 Brown Street, Brisbane, Qld 4000
T 3356 9876 F: 3356 9871 Ref: Harry Jones

Buyer: Graham BROWN and Jane Rosemary COX
20 Harry Road, ESK Qld 4020

Solicitor: A. Mitchell & Co., 2 Michael Street, Countryside Qld 4020
T: 07 4445 0246 F: 07 4445 0255 Ref: Mary Mitchell

Property
Land: The agent should do a little search before completing the description of the land.

Address: If possible a street number should accompany the address or, in the absence of such
particulars, attach a detailed plan indicating the location of the property.

Description: The Real Property Description (RPD) is essential if one is available. However, a contract
will not be voided through lack of an RPD. The description includes a lot number, registered plan
number, and if applicable, Parish and Country details.

Considerable complications can arise during the conveyancing process if the description is not
accurately stated.

If you are selling lots “off the plan”, it is wise to consult with the sellers solicitor for an accurate
description of a subject property before registration of the plan.

There is an option in the contract for vacant/built-on and freehold/ leasehold. Delete whichever is not
applicable.

Title reference: This refers to the subject properties title reference number (or the registered number
of the Crown Lease where applicable).

Land Area: The contract states “more or less” in this instance. However agents must not be
complacent when filling out these particulars.

If you do not know the area of the block it is safest to leave it out. Agents have been sued in cases
where the wrong area was shown on the contract. Do not under any circumstances attempt to alter
the area from the way it appears on the RPD (for instance conversion from imperial to metric
measurement).

Some agents attach a copy of their search or search extract to the contract. There are several
possible effects of this practice, and not necessarily any contractual effect, and you would be wise to
be guided by the sellers‟ solicitor on this point. Eg:

Address: 20 Ocean Rise, Beachmere, Qld. 4000 Built-on
Description: Lot 66 on RP 2468, Parish and Hopetoun
Title Reference number 44281964
Area: 809 m2
Land sold as Freehold

Present Use: Give a brief description of the current use made of the property.

If the agent knows that the present use is not a conforming use, he should make the parties aware of
its current use. In other words, do not represent another use. In the contract the seller does not
warrant that the present use is lawful. So if you include the present legal use in the contract, it is
proof that you have disclosed what that use is. A safe guide here is to consult the current zoning and
make sure the property use reflects that zoning.

Eg. A house or vacant land would be described as “residential”. A factory might be described as
“heavy industrial”.

Local Government: Insert the name of the Local Council where the land is situated. Eg: Brisbane City
Council, Maroochy Shire Council.

Excluded Fixtures: These are items that the seller is excluding from the sale. For instance, a built-in
bookshelf, built-in dishwasher, air conditioner, pool equipment, barbecue burners, plants or
landscaping features or any other fixed items which would normally be included in the sale but in this
instance the seller reserves to themselves, e.g. air conditioner.

Note: It is a good idea to refer to page 3 of the contract 1. Definitions 2(k) improvements, and read the
standard terms of the contract regarding the improvements that are deemed to be a part of the sale.

Included Chattels: There are chattels, or moveable objects, which are included in this sale. For
instance a ride-on mower, furniture, pool cleaning equipment or pool umbrella, washing machine, or
garden shed.

Detail these as included chattels in the contract. Once again refer to page 3 in the terms of contract
for an explanation of chattels in a sale. Eg. Hoover washing machine

Matters Affecting Property
Title Encumbrances: Do a title search, the sooner the better. In fact, the contract is best prepared
after a title search at the time of listing. It is preferable to search then, rather than at the time of sale.

If there are encumbrances on the land that will not be released on or before settlement, include the
details here. The seller‟s mortgage, for instance, will be released at settlement and should not be
included. However, an easement to the electricity authority or an access easement to adjoining land
should be inserted here. Simply indicate the type of encumbrance and its registered number.

As the property is defined [clause 1.2 (m)] as the land, the improvements on it and chattels,
encumbrances relating to any improvements or chattels must also be removed before settlement.
Examples include Bills of Sale and similar charges and liens over chattels.

Problems can arise in other ways. For example, power lines, water pipes or drainage pipes serving a
building may have been mistakenly erected over land owned by others, or the land may have been
subdivided later, or simply sold to different persons. Any of these things should be referred to the
sellers‟ solicitor.

There are some rights reserved to the Crown by every Deed of Grant. You do not have to worry about
them. The contract declares that the sale is subject to them. In places like Ipswich, Gympie, or Mt Isa,
there may be rights extending to a certain depth below ground.

The terms of contract do not contain a definition of the term ”Title Encumbrances”. A title
encumbrance is a term that can only mean those things listed as title encumbrances in the Reference
Schedule.

If there are encumbrances on the title which are not listed in the contract, the buyer will be entitled to
avoid the contract, hence the importance of obtaining an up-to-date title search at the time of drawing
up the contract. Look for easements, caveats, covenants, Foreign Ownership of Land Notices and
council registrations over the title.

When completing this section it is important to make an accurate disclosure. Many agents write,
“none known to seller” or “searches will reveal”.

However, the Queensland Law contract places a heavy onus on the seller/ agent to make an accurate
disclosure and these statements will not protect the owner‟s obligation at law to fully disclose.

Eg. Easement 601990405

Tenancies: This part is optional, and is only completed if the property is sold with a tenant in place
who will still be there after settlement. This will be usual with an investment property. Include details
of any tenancy. As an example:

Tenant‟s name: John David SMITH
Term and Option: 1 year plus 1 year option
Starting Date of Term: 10 January 2002
Rent: $200 per week
Bond: $800 (RTA receipt number 4428)

Vacant Possession: If the property is being sold as “vacant possession” then the tenant must vacate
the property by settlement.

If vacant possession is required, the tenancy clause must be left blank.
It is also essential that an agent ensure that the tenant is given adequate notice to vacate the property
in accordance with the Residential Tenancies and Rooming Accommodation Act.

When determining the date of settlement of a tenanted property where vacant possession is required,
notice to leaved should not be issued until other contract conditions where practical have been
fulfilled.

Fixed term tenancy: notice to leave may be given up to two months before the lease expires. Once the
lease has expired, the tenancy reverts to a periodic tenancy and 4 weeks notice must be issued in the
event of a sale.

A periodic tenancy is any tenancy arrangement where there is no formal fixed term lease in place or
where a fixed term has expired.

Sample Case Study – Periodic Tenancy:

This contract is subject to finance. Calculate the time needed for finance, say 21 days. The property is
sold so the tenant requires 4 weeks notice to leave. Allow at least 2 days for notices to be delivered
and a further 2 days for cleaning, repairs and the exit condition report to be finalised.

Therefore, the settlement date would be 21 days + 28 days + 2 days = 53 days from the date that the
contract is signed.

Price
Deposit Holder: This is sometimes called the “stakeholder”. Insert the name of the person or company
who will hold the deposit. Usually this will be the agent or one of the parties‟ solicitors, e.g.
Harcourts Real Estate

If the contract is more than 60 days in duration, the parties may elect to have the deposit invested in a
special trust account. In this case, insert the names that the special trust account has been opened in.

Purchase Price: Insert numbers only. It is not necessary to use words. This is because it is common
to negotiate on a contract and there must be the provision of space for counter offers e.g.: $180,000

Deposit: It is common for the deposit to be paid in two instalments – an initial holding deposit and
then a more substantial deposit some time later.

Where the deposit is payable in one payment:

Deposit: $18,000 payable when the Buyer signs the contract

When the deposit is payable in two instalments:

Deposit: $500 payable when the Buyer signs the contract

$17,500 payable on confirmation by the Seller.

Make sure that the first instalment of the deposit is sufficient to cover the termination penalty. This is
calculated at 0.25% of the contract price.

Default Interest Rate: This is the rate that will apply if the buyer doesn‟t pay on time. You can leave
this blank because if no figure is inserted, the rate published by the Queensland Law Society will
apply. This rate is quite prohibitive and is usually considerably more than the interest being paid on
bank investment rates. It is calculated on any amount outstanding on the same daily rate as a credit
card.

Finance
If the contract is subject to finance the Reference Schedule must be completed in every respect.

A buyer should not be restricted unduly in being able to shop around for suitable finance if a lender
declines their application or they decide to go with another financial institution. However, it is
important that if finance is not approved, the onus is on the buyer to prove that an application was
lodged with the institution or class of institution nominated on the contract. However if the finance
clause is used as it stands, it should be properly completed.

Please refer to the terms of the contract p3 3. Finance and read the clause that applies to this
provision. If the contract is a cash sale, then this section is to be left blank.

Finance Amount: This is the amount that the buyer needs to borrow to complete the purchase. Insert
numbers only: there is no need for words e.g. $125,000. If no finance is being obtained, do not delete
the clause: just leave it blank.

Financier: Identify the proposed financier, Bank, Building Society, even the Branch if known. Now that
the 1997 contract specifies “approval on terms satisfactory to the buyer”; a purchaser has wider
rights to avoid a contract if not happy with the terms of finance. Eg. Nationwide Australia Bank,
Coorparoo.

Finance Date: This is the date that the Buyer must notify the Seller that its application for finance has
been approved. If the Buyer does not notify the Seller either way by 5 pm on this date the Seller has
the option to terminate or enforce the contract (see Clause 3).

It is wise to insert an actual date for approval rather than a phrase such as “21 days from the date
hereof, for example”. This reduces the ambiguity of when a notice should be served, especially if a
party is working from an undated contract. Eg. 16 March 2000.

Please refer to Dates in contract special hints later in this chapter for some information on how to
calculate contract dates.

Buyer’s Inspection
Building Inspection and Pest Control Inspection

If the contract is subject to a building/pest control inspection then the building inspection/pest control
date should be completed together with the name of the inspector. This will automatically means that
Clause 4, page 4 (Terms of contract) relating to building inspection and pest control inspection reports
will apply.

If this section is not completed, the contract will not be subject to the buyer obtaining a satisfactory
building inspection or pest inspection report.

The buyer can terminate the contract up to 5.00 pm on the Building Inspection Date if it has not
received a building inspection report satisfactory to the Buyer. If it does not terminate by 5.00 pm on
the Building Inspection Date, it loses the right to terminate the Contract under that clause. Eg. 9
March 20000 Action Property Inspections.

Delete this clause for vacant land

The building inspector nominated by the buyer must be an appropriately licensed inspector, architect
or engineer. The report must also be in writing and the seller reserves the right to inspect the report if
it is not satisfactory.

Note: If the buyer or seller requests a different building or pest inspection clause to be drafted under
special conditions on the contract, then this special condition should not be activated and the space
should be left blank.

Electricity Safety Switches
As of 1 September 2002 all flats, units and homes sold in Queensland must include a special
condition regarding whether an electrical safety switch has been installed on all circuits. The special
condition provides for the seller to disclose whether safety switches are installed or not. In the event
that they are not installed, then the buyer warrants that they will install safety switches within three
months of settlement.

There are two special conditions that can be used. One relates to the sale of detached residential
dwellings and one that relates to the sale of dwellings under the Body Corporate and Community
Management Act.

Settlement
Settlement Date: Insert the date for settlement. Check that it is a business day. Make sure the
settlement date is compatible with other conditions of sale, e.g., Notices to tenants, and any prior
settlement arrangements.

It is important to again insert an actual date rather than “30 days from the date hereof”, for example.
This adds certainty to the contract and ensures that all parties are clear about their obligations to
settle at a certain time.
Eg: 2 April 2000

Place for Settlement: Insert the city or town where settlement is to occur. This will usually be where
the Seller‟s solicitors or Seller‟s bank is situated. Eg: Mountainview.

Signing
In practice it is usually the buyer who makes an offer by signing a contract and delivering it to the
seller. But there is no reason why a seller cannot make an offer. In fact, when a seller alters terms of
a buyer‟s offer and initials them and returns the contract to the buyer, the seller is in effect making a
counter-offer.

NOTE: Make sure the buyer is aware that signing the offer is a serious step, and once the seller
accepts the offer, there is a binding contract in existence. We do not exchange contracts – all is done
on one contract document. Contracts signed by buyers are offers, and the buyers must be prepared to
proceed if their offer is accepted by the seller signing/initialling the contract. This procedure is
different from other states, and buyers may not realise the significance of signing a contract.

Witness: The buyer and seller sign in the presence of a witness on page 2. There is no strict legal
requirement for a witness, but from the agent‟s point of view it would be most unwise not to have
signatures witnessed. Be careful that the signing takes place in the presence of a witness.

Initialling: On the fifth edition contract, the parties initial each page. It is also essential that all parties
to the sale initial all alterations or changes to the contract. An agent cannot initial a contract on behalf
of a party to the contract unless authorised in writing to do so.

The deposit holder also signs on page 2 when it receives the whole deposit or the first instalment of
the deposit.

Contract Distribution
The correct distribution of contract copies is important. Keep a record of how and when the copies of
the contract were dispatched to the parties. The original contract must be forwarded to the buyer or
the buyer‟s solicitor.

The original signed duplicate copy is to be forwarded to the seller or their solicitor. If you are using
Realworks, there must be two copies of a contract prepared. Both copies will have original signatures.
It is always a good idea to have at least two photocopies of the contract made. One copy should be
made available to the financier and one retained on the agents‟ file.

The Stamp Duties office in Queensland will only stamp a contract for conveyancing purposes if it
contains the original signature(s).

Faxed Signatures
A contract is considered binding if it is signed via fax. However, it is important to have the original
documents also signed as soon as possible. This is because the Stamp Duties Office will not process
a faxed document.

Contract Special Conditions
Page two of the contract has provisions for the formation of special conditions. Sometimes a special
annexure may also have to be added to the contract for special conditions.

Special conditions are additional conditions placed in the contract by the parties to suit a particular
transaction. In other words, special conditions are those terms of the contract outside the standard
conditions.

Common Special Conditions
The most common special conditions drafted in residential sales are:

 Subject to the sale of the buyers property / subject to the completion of the sale of the buyers
property.
 Subject to the transmission of title by death
 Subject to the registration of the registered plan
 Subject to the completion of building works

It is essential that an agent liaise with the respective solicitors for each party to the contract when
drafting special conditions.

Most agents have access to comprehensive special conditions that have been drafted by solicitors to
suit various contract situations.

However, agents are not qualified legal practitioners and should always check the suitability of such
clauses before requiring a client or customer to sign the contract document.

NOTE: A very good publication to assist with special conditions is “Clauses made Simple” by Robert
Balanda. It is an ideal reference for agents who need access to legally drafted clauses in the absence
of a solicitor. The author, who is a solicitor, has also published the clauses on a CD Rom for easy
application on Realworks.

It is important however that you always seek legal advice when preparing contract special conditions.

Contract Special Hints
Do a title search before completing the Contract. It is recommended that this be done at the time of
listing the property.

After signing, immediately fax the contracts to the parties‟ lawyers promptly. Also mail the originals as
soon as possible. Do not hold on to them pending finance, special conditions etc. This could
jeopardise the sale.

Note important dates in your diary:-

a) Cooling off period
b) Finance approval
c) Payment of deposit instalments
d) Building and pest inspection
e) Settlement

Alert sellers that any problems subject to a Local Authority notice, or a notice under the Building Act,
could entitle the buyer to terminate the contract.

Locate all the keys and have them ready for settlement.

Here are some suggestions from legal practitioners that you might find helpful.

Dates
Dates where possible should always be actual dates

It is not sound business practice to insert, for instance, “thirty days from the date hereof”. This is
because some parties to a contract can calculate dates differently and this can lead to uncertainty in
notification deadlines. For example, dates under the Property Agents and Motor Dealers Act include
the date of document as day one. However common law calculation of dates does not include the
date of document as day one.

It is also difficult for third parties to a contract (especially financiers) to perform according to contract
special conditions when they are referring to a copy of an undated contract with the finance clause
stating that finance notification is due “21 days from the date hereof”. In this case, 21 days from what
date? This is a common situation that occurs because agents usually only have two contracts signed
during negotiations. If additional contracts are signed or copies made, technically they should be
presented and stamped at the Titles Office as part of the settlement process.

Dates for finance: should allow a reasonable time. If the time is too short, then the buyer will probably
have to request an extension and that gives both parties to the contract an opportunity to withdraw.

The time required for finance will depend on the merits of each individual application and the type of
institution involved. As a guide however, it is reasonable to expect a straightforward application to be
processed by a bank, building society or credit union around 21-28 days. However, some mortgage
insurance companies may demand that the financier allow at least 35-42 days for processing some
residential finance applications.

Building and Pest Inspection Dates: a reasonable time should be allowed. If the time is too short, and
a report has not been obtained and considered and any problems sorted out, then the buyer‟s only
option is to terminate. Most building and pest inspections can be completed and reported back to the
buyers within 7 days.

Make sure buyers are aware that they have to arrange the inspection. There have been instances
where buyers have thought the agent or solicitor would arrange the inspection. The solicitor may not
even have the contract yet.

Dates for settlement: where there is a prior sale make sure that there is a date for settlement of that
contract inserted in the current contract and that the contract is conditional upon the completion of
that sale. Quite often these sales will have a contemporaneous settlement. This means that both sales
will settle at the same time and often at the same place.

Compatible dates for sale and purchase: in instances where a seller is selling a property and
purchasing another one, be sure the date for their purchase settlement is not before the date of the
sale of the other property.

Date for settlement to be a reasonable time after all inspections have been carried out and finance
has been approved. Buyers do not like to start searches until these things are in order. Having to ask
for extensions gives a seller an opportunity to terminate.

In Queensland a sale involving a mortgage can be completed comfortably within 30-45 days. It is
possible for settlement to occur under 30 days, however, these tend to be sales that do not involve a
financier or mortgage documentation. This is known as a cash sale.

Remember that time is of the essence in Queensland (REIQ) contracts.

Many interstate clients do not realise this and may have a casual attitude to meeting requirements or
completing by a certain date.

Time Limits: Where a buyer has to obtain various things under a contract, make sure a time limit is
put in the clause.

Where there are clauses requiring a buyer to attend to various matters or obtain various things, make
sure the contract says what happens if these things are not done or obtained.

Calculating Contract Dates
When preparing a contract where negotiations have not yet been finalised, it is a good idea to draw a
time line of all the special conditions. Each special condition has a time limit as to when it will be
fulfilled. For instance, most residential contracts will be subject to a cooling off period. This will be 5
business days.

If the contract is subject to a satisfactory building and pest inspection this would be around 7 days, so
notification will fall due around the same time as the cooling off period.

If the sale is subject to finance, notification will probably take longer (around 28 days) and won‟t be
due until about 21 days after the cooling off period has expired and the building inspection clause
fulfilled.

Lay all the special conditions along the time line in order of time, from shortest to longest. Now
assess how long you believe it will take to complete negotiations for the sale. This will be guided by:-

 How reasonable the offer is on the property.
 Your knowledge of the sellers and buyers motivation in the sale.
 The complexity of physically signing the contract. This can include how many people are
involved and how easily they can be located to finalise negotiations.

Now estimate how long you think it will take to finalise the negotiations and when you realistically
think that the contract will be formed and dated?

This is the date that you will now use to calculate the rest of your dates from.

For example, you are preparing the contract on the 20 September and you anticipate that it will take
two days to finalise negotiations. All the contract special conditions and settlement dates would then
be calculated from the 22 September. If the negotiations take longer than anticipated and the contract
is not formed and dated until a later date, then simply alter the dates on the contract when it is being
finalised and have all parties to the contract initial the changes.

Deposits
Make sure that buyers are aware of the deposit clause. Quite often buyers do not realise that they
have to find extra money before settlement for the deposit. They often believe that their financier will
advance monies to them once finance has been approved. This is very unlikely.

They may also believe (usually mistakenly) that, if they are selling a property, that they will be able to
get the deposit on that property released to pay a further deposit. Quite often people sign contracts
providing for payment of further deposits and they simply do not have the money. They are surprised
when they are reminded that they must find additional monies before settlement.

Clauses Made Simple
            By Rob Balanda, Queensland Edition

            Subject to Procuring a Contract of Sale for another Property
            (Buyer needs to sell their own property before buying the seller‟s)
            (a) This contract is subject to and conditional upon the buyer entering into a binding and enforceable
                contract of sale on terms satisfactory to him for the sale of his property at (insert address) within
                (insert number) days from the date of this contract, failing which this contract shall be at an end
                and all deposit monies shall then be refunded in full to the buyer.

            (b) In the event that sub-paragraph (a) is satisfied this contract is subject to the settlement of the
                sale of such property by settlement date.

            Subject to the Settlement of the Sale of another Property
            (Buyer needs the sale of their own property to settle before buying the seller‟s)
            (a) This contract is subject to and conditional upon the buyer completing by the (insert settlement
                date) the sale of the dwelling house situated at (insert address) pursuant to a contract bearing
                date (insert agreement date) made between the buyer as seller and (insert buyers‟ names) as
                buyer.

            (b) The buyer warrants that the contract referred to above is a legal, binding and enforceable
                contract of sale and executed by the buyer of their property and in respect of which all special
                conditions have been satisfied and so far as the buyer is aware there are no impediments legal or
                otherwise to the settlement of the sale of that property.

            Subject to Inspection for Termites and Pests
            The sellers acknowledge that the buyer wishes to undertake an inspection of the lands and all
            improvements on the lands to ascertain whether there are any problems with pests or termites.

            The sellers agree to allow a pest exterminator/investigator of the buyer‟s choice access to the lands
            and inside any improvements on the lands for the purpose of carrying out an inspection.

            This contract is subject to the buyer being satisfied with the results of such inspection within (insert
            number) days from the date of this contract, failing which this contract shall be at an end and all
            deposit monies refunded in full to the buyer.

            They buyer agrees to notify the seller in writing within (insert number) days from the date of this
            contract about whether they are so satisfied and in the event that they fail to do so the seller shall be
            entitled to terminate this contract at any time after that date and in such event all deposit monies shall
            be refunded in full to the buyer.

            Permission for Work to be Carried out by the Buyer before Settlement
            The seller agrees that the buyer shall have the right at his expense before settlement date to (insert
            work to be carried out) of a size, make and colour that blends with the other (insert) in the dwelling.
            The buyer agrees that all work carried out by them under this clause shall be carried out in a good
            and competent manner and with quality materials.

            Subject to Work to be Carried out by the Seller before Settlement
            The seller agrees at their expense by settlement date to (insert work to be carried out) of a size, make
            and colour of the buyer‟s choice. The seller agrees that all work carried out by them under this clause
            shall be carried out in a good and competent manner and with quality materials.

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Subject to Council Approval of Plans
            (a) This contract is subject to and conditional upon the buyer receiving in writing from the (insert
                council name) Council that it approves building plans for the construction of (insert description of
                proposed development) on the property on conditions satisfactory to it within (insert number)
                working days of the date of this contract.
            (b) The buyer shall apply to the (insert council name) council for such approval as soon as possible
                and use its best endeavours to obtain such approval within the time set out above. The sellers
                agree to sign all such documents and papers that are required to obtain such approval provided
                that the application to the (insert council name) council shall be at the cost of the buyer in all
                respects.
            (c) Settlement shall take place (insert number) working days after the buyer receives written
                notification from the council that it has approved the plans provided that such approval is on
                conditions satisfactory to the buyer.

            Sunset Clause also known as Escape Clause
            (Right of the seller to make the contract unconditional if they secure a better offer)
            The parties agree that the seller shall be entitled at any time to give the buyer written notice that he
            requires the buyer to advise that condition numbered (insert number of buyer‟s condition to procuring
            a contract of sale on their own property) have been satisfied or waived by them.

            In the event that the buyers have not given written advice to the seller‟s solicitor within four working
            days of receiving such notice from the seller or the seller‟s solicitor that such special condition is
            satisfied or waived the seller shall be entitled to terminate this contract and in such event this
            contract shall be at an end and neither party shall after that date have any claim against the other
            whatsoever except in respect of any breaches of the contract which may have taken place prior to the
            date of termination.

            In the event that this contract is terminated by the seller pursuant to this clause all deposit monies
            shall be refunded in full to the buyer.

            Early Settlement Clause
            (If buyer meets their condition of sale earlier than the time allowed they want to settle earlier)
            The parties agree that the buyer shall have the right to settle early, on a date to be nominated by her
            provided that she gives to the seller thirty days notice in writing that she requires such an early
            settlement and she nominates in such notice the earlier date for settlement.

            Back Up Clause
            (A second buyer wants to buy the seller‟s property subject to another contract on the same
            property not proceeding)
            The seller warrants that the property is presently the subject of a contract of sale between themselves
            and (insert buyers‟ names) as buyers and that contract is subject to the buyers‟ (insert buyers‟
            condition of sale e.g. obtaining approval of finance) by no later than (insert date).

            In the event that the (insert buyers‟ condition e.g. finance is not approved) by (insert date) and the
            benefit of the (insert buyers‟ condition e.g. financial approval) clause of such contract is not waived by
            the buyers by 5.00pm on the (insert date being two business days after conditional date) the seller
            agrees to terminate such contract.

            This contract herein is subject to the buyers in the contract referred to above, or the seller,
            terminating such contract by 5.00pm on the (insert date being three business days after the condition
            approval date). The seller agrees not to grant any extensions of time to the buyers in the contract
            referred to above to allow those buyers to obtain such (insert buyers‟ condition e.g. approval of
            finance).

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Subject to Solicitor Approval
            This contract is subject to and conditional upon the buyer‟s solicitors approving this contract of sale
            within three working days from the contract date.
            If the buyer‟s solicitor does not approve this contract, the buyer may within the said three working
            days terminate this contract and all deposit monies be refunded in full to the buyer.
            The buyer agrees to advise the seller in writing as to wether this clause has been satisfied within 24
            hours after the said three working days.

            Subject to finance
            (Already included in REIQ contract – complete finance details on page one of contract)
            (a) This contract is subject to and conditional upon the buyer receiving approval of finance in writing
                within (insert number) working days from the date of this contract (insert the approval date) for a
                loan of $(insert loan amount) from (insert mortgagee‟s name) on terms satisfactory to the buyer
                and on the security of a first mortgage over the property, failing which this contract shall be at an
                end and all deposit monies refunded in full to the buyer.

            (b) The buyer agrees to use his best endeavours to obtain finance approval within such period and
                agrees to notify the seller or their solicitor in writing of the result of its application for finance not
                later than two working days after the approval date.

            (c) In the event that the buyer fails to notify the seller or their solicitor in writing that finance has
                been approved on terms satisfactory to him, or fails to waive the benefit of this clause within two
                working days after the approval date the seller shall be entitled without prejudice to their other
                rights to terminate this contract of sale and in such event all deposit monies shall be returned in
                full to the buyer.

            Subject to Building Inspection
            (Already included in REIQ contract – insert date on page one of contract)
            The seller acknowledges that the buyers wish to arrange for an inspection of all improvements on the
            land by a builder of their choice. The sellers agree to allow a builder of the buyers‟ choice access to
            the land and inside the improvements on the land for the purposes of carrying out an inspection of the
            improvements.

            This contract is subject to the buyers and the builder selected by the buyers being satisfied with the
            results of the inspection of the improvements within (insert number) working days from the date of
            this contract, failing which this contract shall be at an end and all deposit monies refunded in full to
            the buyers.

            The buyers agree to notify the seller in writing within (insert number) working days from the date of
            this contract about whether they are so satisfied and in the event that they fail to do so the seller shall
            be entitled to terminate this contract at any time after that time and in such event all deposit monies
            shall be refunded in full to the buyers.

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The Real Estate Dictionary

Definitions

Conveyancing: The act of transferring property or the rights in a property from one person to another.

Deposit: A deposit is a payment as security for the performance of the contract by the buyer. It is the
agreed amount of damages between the parties to the sale in the event that the buyer defaults and
does not complete the contract. It also forms part of the purchase money. The payment of a deposit is
not necessary for the contract of sale to be enforceable. However, a deposit is normally paid in full or
in part to the deposit holder. Failure to pay an agreed deposit takes effect as a breach of an essential
term of the contract. The amount of deposit should not exceed 10% of the total purchase price. A
deposit in excess of 10% would constitute an instalment contract.

Deposit Dispute: In normal circumstances an agent must pay the balance of deposit monies to the
seller within 14 days of notification. However, if the agent receives notification of a dispute, there is
no power to make payment until further notice has been given advising that the matter has been
resolved and payment can now take place. It is wise that the agent does not release the deposit until
notification has been received from all parties to the contract.

Notification: All contract notification must be in writing. Verbal notification is in breach of the terms of
the contract. Notification is essential for the fulfilment of special conditions to the contract. Failure to
notify can have serious implications under contract law.

Special Trust Account: This is a trust account especially opened by the stakeholder on behalf of the
parties to a contract for the investment of the deposit monies. A special trust account can only be
established if the contract is for 60 days or longer.

Stamp Duty: A buyer is required to pay stamp duty on the contract. This is carried out during the
conveyancing process.

Transfer Documents: These are documents required for the conveyancing or transfer of land. The
buyer must prepare the transfer documents for stamping and settlement. The seller is obliged by law
to hand their transfer documents over in exchange for the balance of the purchase price.

Unconditional Contract: This is a contract where there are no special conditions to be fulfilled. A
contract can be negotiated and formed as an unconditional contract, or it can become unconditional
after all the special conditions have been fulfilled.

Vacant Possession: relates to the unimpeded physical enjoyment of the property. This carried with it
the connotation that the property at the time when the buyer requires possession will be free of
rubbish and physically useable for the purpose intended. The tenants must vacate a property that has
been tenanted by the date of vacant possession.

Date of Sale: Under Common Law, the date of sale is the date that transfer documents are
exchanged and title over the property is transferred to the new owners. This is usually at settlement.

However, it is prudent to advise investors that the date of sale for tax purposes will be deemed the
date of contract. This is because a buyer can be seen to benefit or suffer a loss from the time they
enter into an agreement to purchase, and not necessarily when the sale completes.

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