Throughout the conveyancing process, you are likely to hear the term ‘time remains of the essence’ numerous times and you may be asking yourself what does that means? Put simply, it means that the dates and times that are specified in the Contract are to be adhered to strictly.

This term is used in Real Estate Contracts in Queensland to ensure that the process of buying and selling houses is efficient and is conducted within a reasonable time period by ensuring all critical dates are met.

Some of the dates can be extended in the contract if there is mutual agreement between the buyer and seller. The request for an extension needs to be made in writing to the other party. It is important to note that parties are not obligated to grant extensions.

If you do not meet a critical date in the contract and have not obtained a request from the other party, then you risk the possibility that the contract is terminated. Depending on the Contract and the critical date that is not met you may also be in breach of the contract.

Buyers are usually asked to pay a deposit to show their intention to proceed with a contract. The amount of the deposit and when the deposit is due will vary between each contract. The price of the deposit usually reflects the price of the purchase but is no more than 10% of the purchase price.

Meeting Contract Dates

It is essential that you pay the deposit by the time stipulated in your contract to avoid being in breach. If you do not pay the deposit within the specified time

The deposit is usually held in the trust account of the agent or solicitor until settlement. Once the property has settled the deposit is released to the seller.

Usually, a bank transfer is sufficient, however, if there is a large amount of money sometimes it is best to go into your branch to ensure that the money gets to the intended location in time.

For a contract of sale to be binding the contract must be in writing and signed by both the Buyer and the Seller. The Contract date is the date that the last party signed the contract. It is important to be clear on the contract date as the critical dates are calculated from the date of the contract such as the cooling-off period, the initial deposit, and the settlement date.

Standard Condition 4- Building and Pest Inspections Reports Explained for Buyers

If your Contract is subject to a satisfactory Building and Pest Report on the property, you must take all reasonable steps to ensure that inspections take place. A licensed inspector must be used, and it is essential they provide written reports. If you are satisfied with the Building and Pest Reports, you must let your Legal Representative know by the due date in the Contract. If you are not satisfied with the Building and Pest reports, you may terminate the Contract or try to negotiate with the Seller. There is no certainty that the Seller will engage in negotiations with you if you are not satisfied with the information found in the Reports. In the standard REIQ Contract, there is a requirement for Buyers to act ‘reasonably’. If you decide to terminate the Contract, the Seller may request a copy of your Reports and you must provide them.

Extensions of Time or Waiving the Clause

If you are unsure of how to proceed by the due date for your Reports (for example, your inspections are delayed, you have not received your Reports or the Reports identify matters that need further investigation), you may request an extension of time. This must be mutually agreed upon by the parties.
If you elect not to obtain written reports, or you are not satisfied with the Reports, but you still want to proceed, you have the option of waiving the benefit of the Building and Pest Condition. This means that you cannot negotiate or terminate the Contract on the grounds of the Building and Pest condition.
If you do not notify the Seller’s representative that the Building and Pest condition is either satisfied (with or without negotiations) or waived by the date specified in the Contact, then the Contract will continue, and both the Buyer and the Seller have the right to terminate the Contract until such time as notification is given of either termination or waiver of the Building and Pest Condition.

Standard Condition 3- Finance Explained

If a buyer requires a loan from a bank to purchase property, the contract will be subject to finance. The buyer must take all reasonable steps to obtain finance by the finance date stated in the contract. This entails making a finance application with your chosen lender and pursuing the application.

If you receive formal finance approval from your lender, you should contact your legal representative so that they may let the other side know. Once you have given notice of approved finance it cannot be withdrawn. You must do this by the date stipulated in the contract.

If you do not obtain finance by the finance date, then you can choose to either terminate the contract or request an extension of time from the seller. The seller may ask for proof of the reasonable steps you have taken to follow up your finance application.

Another option you have is to waive the benefit of the finance condition. This means that you are bound by the contract regardless of whether you have or will receive finance approval from a lender.

If you do notify the seller or the seller’s representative that the finance is either approved, not approved, or waived by the finance date then the contract will continue and both you and the seller have the right to terminate the contract.

PEXA stands for Property Exchange Australia Limited, and it is a platform for electronic conveyancing. If a Buyer and Seller agree to use the PEXA platform, the settlement of their property will be transacted through the online platform which is supported by legislation in Queensland.  Parties still need to sign paperwork and complete steps outside of PEXA, however, PEXA allows the parties to complete their transfer of title paperwork and finalise their financial arrangements electronically.

 How it works
When parties agree to settle in PEXA, a private workspace is created. The solicitors for the Buyer and Seller join the workspace, and they invite the Banks involved. We recommend PEXA transactions because they increase transparency between the parties as to how their settlement preparations are tracking, and it offers an efficient communication channel with Banks.

Advantages
PEXA is a particularly useful tool for settling matters when a physical settlement may be difficult, such as during lockdowns due to the COVID-19 Pandemic. PEXA allows for the settlement process to be completed from the comfort of an office or home and bypasses the need for an in-person settlement.
Another advantage of PEXA is that cleared funds reach the Seller’s account within a very short period, avoiding having to exchange cheques and any banking delays. The Reserve Bank of Australia performs the financial transfers on behalf of the parties, so your funds are secure.
Of course, like all technology, there are risks to using electronic conveyancing and it may not be possible. There are sometimes system delays and not all law firms have adopted the PEXA system.
 It is important that you speak to your legal representative to understand whether electronic conveyancing is suitable for your circumstances. This article represents general information only current at 21 May 2021 and is not legal advice specific to your circumstances.

It is uncommon for a Seller to allow a Buyer early possession (also called early access) to a property. This is due to the high risk that comes with granting early possession.

Seller’s Risk
Early possession can affect a Seller’s Land Tax liability, the Seller’s insurance, and personal liability exposure. The Seller has to “trust” the Buyer will settle on time, maintain the property, and not damage it. The situation can lead to an imbalance in bargaining positions, with the Buyer holding all the “cards” (ie. having possession of the property without paying for it) and the Seller carrying increased risk.
If a Buyer takes early possession and fails to settle on time, the Seller cannot easily re-take possession of the Property. A disgruntled Seller must seek relief in the Court by making an application for Specific Performance of their Contract. Actions for Specific Performance usually require engaging a litigation lawyer and a barrister to represent you. Claims for compensation for property damage by a Buyer would also need to be made in Court.

The REIQ Contract and Early Possession
If early possession is granted, standard REIQ contracts require the Buyer to insure the property and indemnify the Seller for any loss. The Buyer must maintain the property at its handover condition until the Settlement Date and must not alter the property. In practice, these obligations are difficult to enforce.
When early possession is granted, the rights of both parties are significantly impacted under the Contract. We suggest you contact us if you are considering granting early possession before coming to any agreement.