Advertisement

REIQ contracts – Place for Settlement

With the introduction of the eConveyancing mandate, Queensland Law Society (QLS) reminds practitioners that it is still critical for Place for Settlement to be completed correctly in the Reference Schedule of the REIQ contracts, even if settlement is anticipated to be electronic.  

QLS has received feedback that this item is often left blank or is completed with ‘PEXA’.

The ‘Place for Settlement’ is relevant to the definition of ‘Business Day’. If the date for performance of an obligation (this includes the  settlement date, finance approval or building inspection report dates) falls on a day that is not a ‘Business Day’ then the obligation may be performed on the next Business Day.  The definition of ‘Business Day’ in the contract is:

Business Day” means a day other than:

  1. a Saturday or Sunday;
  2. a public holiday in the Place for Settlement; and
  3. a day in the period 27 to 31 December (inclusive).

If the ‘Place for Settlement’ in the Reference Schedule is not completed correctly, has ‘PEXA’ inserted, or is left blank, there are significant consequences for the parties and for practitioners:

  • The definition of ‘Business Day’ excludes ‘a public holiday in the Place for Settlement’. The definition of ‘Place for Settlement’ becomes critical when settlement is occurring on a local public holiday.
  • Most public holidays apply to the whole of Queensland, but special holidays for certain cities, towns or districts may be declared under the Holidays Act 1983 (Qld). This means the ‘Place for Settlement’ inserted in the Reference Schedule must be a city, town or other physical location or that part of the definition of Business Day will be uncertain.
  • PEXA is not a city, town or other physical location and should not be inserted as the ‘Place for Settlement’ in the contract. If ‘PEXA’ is inserted, the phrase ‘public holiday in the Place for Settlement’ in the definition of “Business Day”, will be uncertain. The phrase may be interpreted as: referring to a day when PEXA is not operating due to a holiday. PEXA is open for business on all weekdays except when the Reserve Bank of Australia is closed in Sydney and Melbourne; or have no meaning because PEXA is not a physical location for the purpose of public holidays under the Holidays Act 1983 (Qld).

In either case this will mean that if settlement falls on a public holiday in the location of the land or the parties (eg. bank holiday or show holidays) it will be a ‘Business Day’ and settlement will be required on that day. However, if clause 10.5 (3) of the current REIQ Contract applies because settlement falls on a date that both the Sydney and Melbourne offices of the Reserve Bank are closed, the Settlement Date will be taken to be the next Business Day. 

  • If the Place for Settlement is left blank, it is taken to be Brisbane CBD.  This will mean that only whole of Queensland public holidays and special holidays for Brisbane will be non-business days. This means if the Settlement Date is a business day in Brisbane, settlement must occur on that day. This could be inconvenient for practitioners and parties located elsewhere in Queensland if it is a special holiday in their locality, but it is still a business day in Brisbane.  

If involved in preparing the contract, practitioners should consider their clients’ individual circumstances and specify a Place for Settlement which is appropriate for the particular transaction. 

If PEXA is already specified and the settlement date or any other date for performance of an obligation falls on a public holiday in the location of the parties, practitioners should consider agreeing to amend the ‘Place for Settlement’ or agreeing to new dates for performance of the affected obligations. If the settlement date is impacted and the contract is the current REIQ contract terms, then in the absence of agreement, one party may extend to the next business day pursuant to clause 6.2, subject to any other terms of the contract.

Lexon has updated the Conveyancing Protocol with minor edits to prompt this issue.

Share this article

Leave a Reply

Your email address will not be published. Required fields are marked *

Search by keyword