Did you know that the standard REIQ Contract for Houses and Residential Land (16th Edition) provides that the property is at the buyer’s risk from 5 pm on the first business day after the contract date?
In this article, we discuss:
- what this means for you, as a buyer; and
- what you should do to protect yourself.
What does the standard REIQ contract say about risk?
Clause 8.1 of the standard REIQ contract for the sale of houses and land reads as follows:
“The Property is at the Buyer’s risk from 5pm on the first Business Day after the Contract Date.”
So, what risk passes to the buyer?
In Queensland it is not unusual to have settlement dates that are 30, 45 or even 60 days from the date of the contract.
The risk is damage to the property between the period of time that you sign the contract and the date of settlement.
Anything could happen before settlement. Think fire, flood and even hail – all of which are common events in Queensland.
How do you protect yourself?
There’s two possible ways to protect yourself.
You can either:
- amend the standard REIQ contract to shift the risk to the seller. Any amendments must be done by way of special conditions and the special conditions should be carefully worded and drafted; or
- if amending the standard REIQ contract is not an option, you must get in touch with your insurer as soon as you sign the contract to obtain appropriate insurance cover for the property. Your insurer will be better placed to advice you on the type of cover that is appropriate for you.
Conclusion
To summarise:
- the standard REIQ contract provides that risk passes to the buyer from 5 pm on the next business day the contract is signed;
- once an unamended standard REQI contract is signed, the buyer assumes the risk in the property;
- take out appropriate insurance to mitigate against any risk that may eventuate and to protect your investment.
If you have any questions about this article or wish to discuss its contents, please call 1300 080 569 or email [email protected]
Irfan Ebrahim
13 January 2022
DISCLAIMER: This article is provided for general information purposes only. Its content is current at the date of preparation. Changes in circumstances or policy or legislation after the time of preparation may impact the accuracy of the information provided. It is not legal advice and is not tailored to meet your individual needs. You should obtain specialist advice from a qualified professional based on your specific circumstances before taking any action concerning the matters discussed in this guide. One80 Conveyancing Pty Ltd will not accept liability for any reliance on this article, including but not limited to, the accuracy, currency or completeness of any information or links.
