The floods through southeast Queensland and northern New South Wales this last week have represented a huge impact in an area just starting to get past the majority of COVID impacts.
It has meant disruption and destruction for hundreds of thousands of people, and a massive recovery and repair effort to come for home and business owners as they clean up what should be a once in several century event (that probably feels like it’s becoming a more common occurrence).
Here in the North, we are used to dealing with the weather, though luckily we have (touch wood) escaped this level of event touching our region for a very long time. But what happens when something does go wrong, and what do you do when you are in the middle of buying (or selling) a home?
As a buyer, there are a number of safety nets in place where a contract may be terminated – particularly in cases where there has been heavy damage due to weather events. There is a statutory five business day cooling off period which applies to residential contracts, allowing for termination for any reason within that period, subject to a small termination penalty (0.25%), should the seller elect to charge it. Past that point (subject to other conditions), there may be an option to rescind the contract under the Property Law Act 1974 (QLD), in the case where a property is destroyed or damaged as to be unfit for occupation as a dwelling. A buyer can rescind the contract up to the scheduled settlement date, however you do need to be able to justify the situation – and the usual recommendation of seeking legal advice applies. The threshold to meet is high and buyers should seek legal advice before attempting to invoke statutory provision.
Interestingly, where a property is damaged but remains liveable, there is no automatic “out” for a buyer. Under the terms of the standard REIQ contract of sale, the property is at the buyer’s risk from 5pm the first business day after the contract is signed – rather than from settlement. Consequently, a buyer needs to make sure that they have put that appropriate insurance cover in place, to avoid issues where they do arise.
In cases where thankfully the property has escaped unscathed but there are other delays due to flooding or other natural disasters (bit hard to get a removalist if they have to paddle to the house) the REIQ standard contract of sale contains provisions for a short extension to settlement due to natural disasters and other delays that may arise.
As always, circumstances are going to be unique to each home, so contact a legal professional for the right advice. In the meantime, stay safe.
Tom Quaid is the REIQ Zone Chair for Cairns