Big changes to REIQ Residential Contracts

January 25, 2022

On 20 January 2022, new editions of the Houses and Residential Land Contract and Residential Community Title Contract were released. There have been a number of changes to the contract terms, some more significant than others. Many of the changes have been implemented to alleviate pressure in circumstances where measures are out of the parties’ control.

Key changes from 20 January 2022

Clause 2.2 – Deposit by Direct Debit (time of payment and grace period)

  • A grace period is allowed to address the impact of delays in the deposit of money to accounts when using direct debit.
  • The day the buyer instructs their financier to pay the deposit from their account will be deemed as the day they have paid (by effect of an electronic transaction) – the buyer will need to provide evidence of payment to the deposit holder and must not take any action to delay the payment.
  • If the money is not received by the due date, the seller may give notice to the buyer requiring payment within 2 business days. The buyer will be in breach if payment is not received within this timeframe.

Note: The purpose of this clause is to strike a balance between allowing time for the money to be credited after payment by the buyer and allowing the seller to take action if the payment is not received.

Clause 5.3(1)(e) – Pool Compliance Certificates

  • A seller is required to hand over a Pool Compliance Certificate for a non-shared pool on the land at settlement.
  • For a lot in a Community Title Scheme (CTS), a seller will be required to hand over a certificate for a non-shared pool on the lot.
  • If the seller fails to provide a certificate, the buyer may terminate contract.

Exception: If a notice of no pool safety certificate is given to the buyer prior to contract being entered into.

Clause 6.2 – Right to extend Settlement Date

  • Either party may extend settlement of up to 5 business days after the scheduled date of settlement for any reason – alleviating circumstances where either party are affected by delays outside of their control.
  • The extension notice must be given in writing before 4pm on the scheduled date of settlement.
  • A new settlement date must be nominated and time is of the essence.
  • More than one extension notice may be given but the nominated date has to be within 5 business days of the original scheduled date for settlement.

Clause 7.4 – Seller Warranties

  • Seller warranties have been reorganized into two categories:
    • Warranties accurate on the contract date; and
    • Warranties accurate on the settlement date.
  • The seller is now required to warrant that there have not been any communications from an authority that may lead to issue of a show cause or enforcement notice or a notice to do work referred to in the existing clause 7.6

Clause 7.5 – Services unrelated to the land

  • A buyer may terminate the contract if infrastructure unrelated to delivery of services (such as gas, electricity, water and sewerage) passes through land that are not protected by encumbrances disclosed in the contract and materially impact the buyer.
  • Under a residential CTS contract, any services infrastructure protected by an easement under part 6A of the Land Title Act 1994 is exempt from the operation of this clause.

Clause 7.6 – Notices to do work

  • The sellers responsibility for notices to do work has changed:
    • Depending on when the notice is issued (prior to or after contract);
    • When compliance with the notice is required (before or after settlement); and
    • Whether the notice is disclosed by the seller to the buyer prior to contract.

Note: If the seller fails to comply, the buyer can settle and claim the cost as a debt after settlement, or, terminate if the notice meets the test of being a material defect in title.

Clause 7.8 – Compliant Smoke Alarms

  • In response to the new smoke alarm regulations, there is a contractual obligation on the seller to install smoke alarms that comply with the new requirements prior to settlement.
  • If the seller fails to do so, the buyer will be entitled to an adjustment on the purchase price of 0.15% – this adjustment will need to be claimed by the buyer prior to settlement and in writing.

Note: There is no right to terminate or claim damages for a breach of this duty.

New definition of Contract Date

  • The definition of Contract Date in clause 1 has been amended to accommodate signing of electronic contracts in Realworks using DocuSign.

For a full summary of the changes please refer to:

Important Notice: The information in this article is current as at 25 January 2022. It is for general purposes only and should not be considered or relied upon as legal advice. The law is complex and you should always obtain specific legal advice about your circumstances from a qualified legal practitioner. If you require legal advice, please contact our office to see how we can help.

Written by Sam Rose, Lawyer and Tiarn Muia, Law Clerk, Wilson Lawyers.