Buying or selling residential property in QLD…the devil is in the detail.

January 31, 2024

When you are considering buying a residential property in Queensland, most sales contracts are prepared using a standard REIQ contract which covers all of the basics that are required for sale of residential property. However not all buyers (and sellers) have similar requirements and not all properties are the same – so there are times when special conditions are required.

Here we explain the standard conditions and some of the more common special conditions which are often included in a QLD residential contract.

Finance Condition

Standard REIQ contracts provide for a finance condition, allowing a buyer to terminate a contract if they do not receive approval for sufficient finance on satisfactory terms by the finance approval date.  For a buyer, unless you already have the total settlement amount, including transfer duty and other fees available in your bank account, a finance condition should be included in a contract.

If you are relying on the sale of another property or asset (eg. shares, crops, crypto currency etc), your contract should include a special condition to allow you a right to exit the contract and recover your deposit if you are unable to convert this asset into accessible cash in time.

This also applies to circumstances where you are relying on receiving money as a beneficiary from a deceased estate, a matrimonial property settlement or an insurance payout.  Often these funds can be significantly delayed or there may be changes to the amount you expect to receive.

Building and Pest  

A “building and pest condition” refers to a clause or condition in the contract that allows the Buyer to conduct inspections related to the condition of the building and the presence of pests. The standard REIQ contract will include a building and pest inspection condition if the condition due date is completed in the contract. This condition provides the Buyer with the opportunity to investigate the property thoroughly before committing to the purchase. This is typically included to protect the buyer from unexpected structural defects or pest infestations that may not be visible during a regular viewing of the property.

Importantly, a building inspection will often not include an electrical inspection, so a special condition may be needed if you have concerns about the electrical wiring on the property.

Due Diligence

Queensland is ‘buyer beware’ when it comes to buying a home and there are limited disclosures a seller needs to make about the property (although there are upcoming changes to the Queensland Property Law Act which will impose additional disclosure obligations).

Including a due diligence special condition in the Contract permits a buyer to make further enquiries on the property and to terminate the contract if they receive any adverse results. A due diligence clause has a much broader application than for example a building and pest inspection.  A due diligence clause is usually wanted by a buyer when they wish to undertake searches that, if adverse results are identified, they would not otherwise have a right to terminate under the contract or at law.

Depending on the scope of the due diligence, this may allow a buyer to undertake surveys, soil tests, body corporate inspections, property searches and other inspections.

It is important that you have a detailed discussion with your solicitor or conveyancer about the property, your intended use and any concerns you have, before you sign the contract, so that the necessary special condition can be included in the contract.

If you have any questions about contract conditions or special conditions, contact our residential conveyancing team.

Look out for part 2 of our bulletin.