If you are looking to buy or sell residential property in Queensland, one of two forms of contract are likely to be used: “REIQ” or “ADL”. REIQ contracts are more common, however ADL contracts are still utilised by some agents. While both forms of contract are largely similar, their differences provide advantages or disadvantages in some areas, depending on whether you are buying or selling.
BUILDING AND PEST INSPECTION CONDITIONS
Both ADL and REIQ contracts contain a standard building and pest condition, which (if activated) makes the contract conditional upon the Buyer obtaining a satisfactory building and pest report.
Both contracts require the Buyer to act reasonably in this regard. However, the ADL version of the condition is more aggressive against the Buyer generally, which may make it more difficult for the Buyer to terminate the contract.
Both ADL and REIQ contracts contain a standard finance condition, which (if activated) makes the contract conditional upon the Buyer obtaining satisfactory finance approval.
If a Buyer seeks to terminate for unsatisfactory (or rejected) finance approval, the REIQ contract is relatively Buyer-friendly in this regard. Conversely, the ADL version imposes a stricter set of obligations on the Buyer, including the requirement to provide to the Seller details of steps taken to obtain approval or written proof of rejection from the financier. Again, this may make it more difficult for the Buyer to terminate an ADL contract.
CONCLUSION – HOW WE CAN HELP
The effect of these differences means Buyers who have received a “borderline” result with respect to a building/pest report or finance approval may be nervous about terminating under an ADL contract, noting the greater risk of Seller challenge.
We have assisted many clients who have presented us with draft contracts (ADL and REIQ) along with particular concerns, which we have addressed through contract edits, contract type swaps or special conditions. The best time to address these concerns is prior to the signing of the contract, as there is limited flexibility once the contract is all signed up. We look forward to assisting you with any contract advice and future conveyancing needs.
Important Notice: This publication is provided as general information 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.