Even in its death throes, the PAMDA monster is revealing it has no intention of fading quietly. Solicitors acting for sellers have been warned to expect a flood of residential contract terminations before the door shuts on the convoluted PAMDA contract presentation and re-presentation processes on 30 September.
Long-term off-the-plan contracts are likely to be the most susceptible to a buyer’s urge to have one last gasp at a PAMDA termination.
Prudence requires agents to check the status of all transitional contracts. You should consider alerting your client’s solicitor in order to minimise any agency ramifications if problems should arise.
The complex transitional rules for contracts and negotiations that straddle the changeover mirror the absurdity of the axed provisions in old PAMDA. Agencies need not overly concern themselves about the transitional procedure itself – just be aware a greater than usual proportion of terminations may arise up until the changeover date.
What are the transitional provisions?
First and foremost, a “non-compliant” signed ADL or REIQ contract that has not been terminated prior to 5.00pm 30 September, it can’t be terminated after that time unless termination is permitted under new PAMDA.
How will this work in practice?
Presentation of Proposed Relevant Contracts
Q. What happens in respect of a non-complying presentation of a “proposed relevant contract” that has been signed by the buyer and correctly re-presented to them prior to the 1 October 2010 where:
- the PAMD 30C Warning Statement is not the front sheet and the buyer has terminated before then
- A. The termination remains valid.
- the PAMD 30C Warning Statement is not the front sheet but the buyer has not terminated by then?
- A. The buyer can NOT terminate an ADL or REIQ contract after 5 p.m. 30 September.
- there was no statement “directing attention” to the PAMD 30C Warning Statement, BCCM 14 Information Sheet (where applicable) or contract and the buyer has not signed the Warning Statement and BCCM 14 Information Sheet (where applicable), but the contract is signed and the Buyer received a copy of the executed contract 30 days before the 1 October?
- A. The buyer can terminate for another 60 days from the 1 October. This is different from the scenarios above because this ground for termination is valid under new PAMDA.
- there was no statement “directing attention” to the PAMD 30C Warning Statement, BCCM 14 Information Sheet (where applicable) or contract but the Buyer received a copy of the executed contract more than 90 days before the 1 October?
- A. The buyer can NOT terminate because the termination window has expired.
- there was no statement “directing attention” to the PAMD 30C Warning Statement, BCCM 14 Information Sheet (where applicable) or contract but the contract is signed after 1 October?
- A. The buyer can terminate during the window of 90 days from the date of the buyer’s (or their solicitor’s) receipt of a copy of the executed contract.
Special Exception: In relation to 3, 4 & 5 if the Buyers have signed the PAMD 30c Warning Statement and the BCCM Form 14 Information Sheet (where applicable) prior to signing the proposed relevant contract and it (or they) were attached to it, all Buyers are prevented from terminating.
Presentation of Relevant Contracts
Q. What happens in respect of a “relevant contract” that was signed by all parties and presented back to the buyer before 1 October without the “attention drawing” requirements having been complied with on the second occasion?
A. The buyer can not withdraw their offer to purchase in an ADL or REIQ contract after 5 p.m. 30 September.
Q. What happens in respect of a “relevant contract” that was signed by all parties and presented back to the buyer before 1 October without the “attention drawing” requirements having been complied with and where the buyer has already terminated the transaction?
A. The termination remains valid.
Cooling Off Period
The 5 business day cooling-off period runs from the date of the buyer’s (or solicitor’s) receipt of the signed contract but if received on a weekend or public holiday, from the next business day thereafter. It ends at 5 p.m. on the fifth business day.
If the buyer signs the contract after the seller (or initials to accept changes made by the seller), the buyer is taken to have received a copy of the contract when the buyer has both signed (or initialed changes) and communicated acceptance to the seller. In other cases, PAMDA does not specify when ‘receipt’ occurs. For this reason it is essential for sellers to have buyers sign a “Receipt Acknowledgement”specifying the date upon which they have received a copy of the signed contract.
A. The Cooling Off Period takes its normal course under old PAMDA.
Q. What happens if the Cooling Off Period did NOT commence prior to 1 October 2010?
A. The Cooling Off Period commences in accordance with new PAMDA after the 1 October 2010.
Q. What happens if the waiving or shortening of the Cooling Off Period has been effected prior to 1 October 2010?
A. Such waiving or shortening continues to have effect under new PAMDA.
After 5:00pm on 30 September:
- any right to terminate a contract under old PAMDA expires;
- new PAMDA applies to all contracts in existence on 1st October; and
- new PAMDA will apply to all contracts entered into from 1st October.
For best real estate agency practice: stick to the rules that currently apply (old PAMDA) until close of business on Thursday 30 September. And start with the new rules from opening up on Friday morning.
Make sure you use version 6 of the Form 30C for all contracts signed on and after 1 October. If a proposed contract has been sent to a buyer to sign before 1 October but the buyer did not sign it and communicate acceptance, a new form 30C should be prepared on 1 October and attached to the contract etc to present all over again.
The new rules are a lot easier – it will just take agents some time to get used to them. Life will eventually be a lot easier for you under new PAMDA.
The above summary covers the transitional rules. For a summary of the new rules that apply to contracts that originate from 1 October (new PAMDA), see our earlier post.