- New Property Occupations Act comes into effect Dec 1
- 1. Can I evict the tenant when I purchase the property?
- 2. Are there standard representations and warranties included inall commercial contracts?
- 3. Can I go ahead even if there is a defect in the legal title?
- 4. Do contracts for the sale of commercial real estate need to be in writing?
New Property Occupations Act comes into effect Dec 1
The real estate world is changing in Queensland
From December 1 industry specific laws will replace the then out dated Property Agents adn Motor Dealers Act, to be replaced by the incoming Property Occupations Act 2014.
What does this mean for you and for us?
Firstly the new Act will simplify the requirements within the industry.
Industry red tape will be reduced and relaxation to licence requirements for developers and agencies are to come into effect.
For the consumer and the agent the single biggest difference is the simplified 1 form for clients to appoint a property agent, as opposed to the 7 forms that currently exist.
Other key changes for property agents include:
1. no longer required to state how they will perform their servies
2. indicate the section of the appointment form that explains the different types of appointments, eg open, sole or exclusive
3. The maximum term of appointment is now 90 days for a sole or exclusive, however these may be terminated after 60 days if needed by the client.
4. End dates no longer required for continuing appointments
5. Deregulated limit on sale commission, meaning agents will be able to negotiate any commission with their clients.
6. Warning Statements no longer required for buyer or sellers with residential property contracts
7. Agents now will also be able to charge commission even though they have beneficial interest in a transaction so long as they declare this to the seller.
8. Buyers no longer require a lawyers certificate to waive or reduce their cooling off period.
These changes along with the single form aims to make the real estate industry more efficient and effective for both the seller and buyer.
You can read more about these changes on our website here
1. Can I evict the tenant when I purchase the property?
Generally not. If the tenant has a legally valid tenancy, i.e., a written lease, and is current on the rent and all other lease obligations, the law usually lets the tenant remain in possession until the end of the lease, regardless of who owns the building. Your best bet is to ask the owner for the legal status of each tenant since your ownership of the building will be subject to those leases. It is a good idea to get your lawyer’s help in evaluating how to deal with the tenants.^ back to top
2. Are there standard representations and warranties included inall commercial contracts?
No, Representations and warranties are always a matter for negotiation.^ back to top
There are many commercial real estate contracts that say, in effect: "The property is being sold ‘as is.’ Seller makes no representations or warranties."
When a seller is making representations and warranties, the seller’s lawyer may insist on adding the cautionary words, " . . . to the best of seller’s knowledge."
That way, the seller is not guaranteeing unknown facts or conditions.
If you are buying income-producing property, your lawyer may want the seller to guarantee the accuracy of the rental income figures as well as the expenses the seller has represented to you.
You may also want the sales contract to include a statement that the seller is aware of no hidden defects in the building – that is, defects that your inspector is unlikely to discover.
3. Can I go ahead even if there is a defect in the legal title?
Yes, the buyer is always free to accept the risk of a title defect, but should first consult with a lawyer to make sure the risk is minimal.^ back to top
There often are ways to reduce the risk to manageable proportions. Alert Property Group recommend you receive legal advice on this matter.
Or if there is a boundary line dispute, you as the buyer may decide to buy the property anyway if only a small piece of the property is involved in the dispute.
Your reasoning may be that even if you lose the disputed area, the remaining land that you are buying is well worth what you are paying.
Similarly, if there is some problem with the building itself – say, a defective heating and air conditioning system – and the seller is not willing to fix it, you may decide that you are getting such a good deal on the building that you will proceed with the purchase despite the defect.
4. Do contracts for the sale of commercial real estate need to be in writing?
Yes, A real estate agreement that consists only of an oral understanding and a handshake will not be enforced by a court.^ back to top
A contract does not have to very fancy to be valid. If it describes the property and the price, it usually will be enforceable in court.
Obviously, however, it is not a good idea to rely on a bare-bones contract when you purchase commercial real estate.
You need much more detail. At Alert Property Group we use and recommend REIQ standard contracts.