Queensland Property Contract Buyer Seller Conveyancing
Navigating the Risks: Reasons Why Sellers in Queensland Should Think Twice About Instalment Contracts
Selling property in Queensland comes with its unique set of challenges and considerations. Among the various options available to sellers, instalment contracts have gained attention, offering an alternative payment structure. However, sellers should exercise caution and thoroughly understand the risks associated with instalment contracts before opting for this arrangement. In this article, we explore seven reasons why sellers in Queensland should think twice about instalment contracts.
Altered Buyer-Seller Relationship Dynamics:
In a standard REIQ contract, the buyer pays a deposit, and the seller can terminate the contract if essential terms are breached, including payment issues. Instalment contracts, however, significantly alter this dynamic. If a buyer fails to make an instalment payment, the seller must provide a 30-day notice before terminating the contract, providing the buyer with an opportunity to remedy the breach.
Limited Seller Control Over Property Title:
Unlike a standard REIQ contract where the title is only registered in the buyer's name upon full payment, instalment contracts grant the buyer the right to serve notice for property transfer after paying one third of the purchase price. This diminishes the seller's control over the title registration process.
Restrictions on Mortgage Transactions by Sellers:
Instalment contracts restrict sellers from mortgaging the property without buyer consent. Any unauthorized attempt to mortgage can lead to contract voidance by the buyer and potential legal consequences for the seller, including fines.
Complex Termination Process for Sellers:
In standard contracts, if the buyer breaches an essential term, the seller can terminate and retain the deposit. In instalment contracts, termination for non-payment involves a 30-day notice period, adding complexity to the process. Sellers must follow this protocol even if the breach involves a failure to pay the deposit on time.
Buyer's Right to Lodge a Caveat:
Buyers under instalment contracts have an express right to lodge a caveat over the property, preventing any other party, including the seller, from registering instruments over the property. This can complicate the property's legal status and affect the seller's ability to deal with the property.
Mandatory PropertyTransfer at One-Third Payment:
Instalment contracts grant the buyer the right to demand property transfer after paying one third of the purchase price, regardless of the contract's original terms. Simultaneously, the seller can require the buyer to grant a mortgage for the remaining two-thirds of the price, creating a unique and potentially challenging situation.
Seller's Obligation to Provide Notice for Breach Remediation:
In the event of a payment default, the seller is obligated to provide a 30-day notice for the buyer to remedy the breach before terminating the contract. This extended timeline may lead to delays in resolving payment issues and may not be as advantageous for sellers as the straightforward termination process in standard contracts.
In conclusion, while instalment contracts may seem like an attractive option at first glance, sellers in Queensland should carefully consider the altered dynamics, limited control, and potential complications these contracts introduce. Seeking professional legal advice is crucial to navigate the complexities associated with instalment contracts and make informed decisions that align with the seller's long-term interests.