Queensland’s Property ‘Saving Grace’ Period

What is the New Settlement ‘Grace Period’ That Has Been Released?

In an exciting instalment to Queensland property transactions made under REIQ Contracts, there is now a settlement ‘grace period’ offered…

In Queensland, the former Standard Queensland Conveyancing Contracts stated that ‘time is of the essence’ and that settlement must occur on the Settlement Date.[1] This means that if a party didn’t fulfil or was late to fulfilling their contractual obligations by the settlement date and or the due date on the contract (even by the span of 1 hour past 4pm on the specified day) then the other party (usually the seller) was entitled to terminate the contract.

With the onset of COVID-19, failed property transactions were only becoming more frequent, with banks scrambling to organize finance in tandem with the standard 30-day conveyancing terms.

Adding insult to injury, in the lead up to settlement, optimistic homebuyers would pay large deposits of money towards the purchase of their property. These deposits fell forfeit to the seller if all requirements for settlement were not met. Most notably in recent times, settlement requirements were increasingly left unsatisfied by the financial aspect of the settlement. Many Queensland homebuyers have been left in the lurch by financiers, and banks, who on the day of settlement are often not prepared and not able to provide the funds required to complete settlement at the designated time. Consequentially, the contracts are discretionarily terminated by the sellers. This leaves the buyers reeling from losing a significant amount of money, and in many instances their dream homes, business venues, or investment properties.[2]

There were still some exceptions to the strict settlement deadlines under the old version of REIQ contract. For example, when a “Delay Event” occurred time for the performance of the parties’ Settlement Obligations was suspended and ceased to be of the essence of the contract. Delays caused by the financier or other parties related to the transaction, did not constitute “Delay Events”, and so the exception did not cover settlements that were terminated due to delays in finance.[3]

Comparatively, the latest version of REIQ Contract (17^th ed.) provides the parties’ contractual right to extend the settlement date by giving notice at any time up to 4pm on the settlement date.[4] It is worth noting that the nominated new settlement date must be no later than 5 Business Days after the original settlement date. The new contracts still cite ‘time is of the essence’, however they are more lenient to ensure settlements can go ahead as planned, albeit possibly a couple of days later than anticipated.

[1] Clauses 5.1 and 6.1 REIQ Contract for Houses and Residential Land -16^th ed

[2] https://www.9news.com.au/national/queensland-couple-lose-dream-home-and-thousands-in-deposit-after-bank-blunder/7f29d2c1-8b95-4a43-822b-c4b2ad20ad9d

[3] Clause 6.2 REIQ Contract for Houses and Residential Land -16^th ed

[4] Clause 6.2 REIQ Contract for Houses and Residential Land -16^th ed

Disclaimer: This publication is intended for general and informative use only and is not to be relied upon as professional financial or legal advice.

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