Navigating the REIQ Purchase Contract: A Q&A Guide to Buying in Queensland
<7 minute read>
Buying property in Queensland often starts with a daunting 21-page document: the REIQ Contract. Not to mention the new Form 2, Seller's Disclosure which overwhelms buyers more than it helps.
Fun Fact: The Seller's Disclosure mentions nothing about flood risk! Be sure to make your own inquiries and satisfy yourself on that aspect.
Whether it’s a standalone house or a unit in a Community Titles Scheme, understanding the "fine print" is the difference between a smooth settlement and a stressful setback.
We’ve sat down to break down the most common questions to help you sign with confidence.
The Basics: EOI vs. Contract
Q: I’ve signed an "Expression of Interest" (EOI). Is that the same as a contract?
A: Not quite. An EOI is typically a one-page document or even a link in a text message that outlines your offer. The REIQ Contract is the formal, 21-page legal document. While some agents go straight to the full contract for negotiations, remember that it only becomes legally binding once both the buyer and seller have signed. In Qld there can also be delays due to the Form 2 Seller's Disclosure - a contract cannot be signed by a buyer without providing the Form 2.
Q: I've signed a contract! The sellers have signed too! What do I do now?
A: Give us a call! We can talk you through all your questions, but here's the highlights reel:
- Pay your initial deposit immediately.
- Forward us a copy of the contract which has been signed by both you and the seller.
- Appoint a solicitor (also known as conveyancer in Queensland).
- Arrange a building & pest inspection (if you have specified this condition in your contract). Your selling agent may be able to suggest some local companies to obtain quotes.
- Obtain building & contents insurance within the next business day from the date on your contract (unless this is covered by a Body Corporate Scheme).
- Our recommended conveyancers and insurance brokers can be found here.
The Important Dates
Q: When is the "Contract Date" officially set?
A: The contract date is the day the last party signs the agreement. This is the "starting gun" for all your deadlines, including finance and building inspections. Say you have a 7 day building & pest clause, 10 day finance clause and 30 day settlement. You and the seller both sign on the 1st of September... this means you must satisfy building & pest (via your solicitor or conveyancer) on 7 September, finance on 10 September and you will take possession of the property on 30 September. If any of those dates fall on a weekend or public holiday, it defaults to the next business day.
Q: How long do I have for settlement?
A: The standard period in Queensland is 30 days from the contract date. It can be longer or shorter, depending on you and the seller's requirements. In a hot market, we often work with buyers on very short finance or settlement timeframes to make our purchase offer stand out from the crowd.
Q: Do I have to be available on settlement day?
A: Nope! All the hard work should have been done in the first week or two of the contract. On settlement day your solicitor or conveyancer will act on your behalf then call you once it's all done and dusted. If you have keys to collect, the selling agent will then be notified by the solicitors to release the keys to you. Settlement usually occurs in the afternoons (2pm onwards) but there can be delays; if you are planning to book removalists, we do recommend booking for the following day or two.
Side Note: Under clause 6.2 of the standard contract, a seller or buyer can extend the settlement date by up to 5 business days without consent. This requires written notice before 4 pm on the scheduled settlement date. While this is a rare occurrence, it can be relied upon for unforeseen circumstances.
Finance & Building Inspections
Q: What are the standard timeframes for conditions?
A: We generally recommend:
- Finance: 14 days from the contract date.
- Building & Pest: 7 days from the contract date. Note: We recommend having your building & pest clause shorter than finance because if you have a concern around the condition of the property and subsequently negotiate a reduction in price, this often means reworking your finance approval.
Q: Does my finance need to be "funded" by the 14-day mark?
A: No. It simply needs to be approved to your satisfaction by the finance date. This gives you the green light to proceed toward settlement.
Q: How do I actually 'satisfy' Finance and Building & Pest?
A: Your solicitor or conveyancer should outline your key dates for you when you engage them. At each milestone, you will need to advise them you are happy to continue with the contract and they will formally advise the seller's solicitors and the selling agents.
Deposits & Risk
Q: How much should I pay for a deposit?
A: Usually, there is an initial deposit (a few thousand dollars) payable within 24 hours of the contract date as a sign of good faith. I like to be a little cheeky and pay at least 3% as the initial deposit - this is often what the selling agent would be paid so they know their commission is quite literally 'in the bank'. If your finance is not approved, or building & pest report is not satisfactory, you can terminate the contract via your solicitor, and your balance deposit would be refunded. The "Balance Deposit" is typically paid once the contract becomes unconditional (ie. all your building & pest, finance, etc is satisfied).
Q: When do I pay all the money?
A: You've paid your initial deposit, and your balance deposit. That's great and means you are now unconditional. It's likely though that you have more money to put towards the purchase. That money is not needed until settlement day. We recommend transferring that money to your solicitor's trust account or your new bank's nominated 'shortfall' account at least 3 business days before settlement. On settlement day, all the money you have, along with the bank's money, will be dispersed to the right people at the direction of your solicitor.
Q: When does the insurance risk pass to me?
A: This is a quirk of Queensland law! The property is at the buyer’s risk from 5:00 PM on the first business day after the contract date. Even though you don’t own it yet, you should have an insurance policy (or a 30-day cover note) in place immediately after signing. If you are buying in a Body Corporate Scheme, you should still satisfy yourself that the Body Corporate holds sufficient insurance and you may like to consider contents or landlords insurance in the lead up to settlement.
Need a hand navigating your next purchase? The Queensland property market moves fast. If you’re looking for a mortgage strategy that aligns with your legal requirements, let’s have a confidential chat.