Changes to REIQ Contracts as a Consequence of Pike V Tighe

Recently the Queensland Law Society and the Real Estate Institute of Queensland (REIQ) released the 15th edition of the standard Contract for Houses and Residential Land. Much of the commentary about the new edition has rightly focused on the introduction of the new GST withholding obligations for land developers; however, an unrelated change was also made in response to the High Court’s decision in Pike v Tighe [2018] HCA 9 (in which this firm represented the successful appellant).

In Pike v Tighe the High Court confirmed that, by virtue of section 73 of the Planning Act 2016 (Qld), the conditions of a development permit run with the land and are binding on successors in title. For more on that decision, please see our case note from May.

Put simply, the effect of the new clause 7.7(e) is that the buyer under a contract may exercise a right to terminate in circumstances where compliance with an outstanding condition of a development permit will result in an interest in land being created. This includes development conditions imposing an obligation to grant an easement in favour of another property. The right to terminate arises if the interest in land is material according to the test in clause 7.5 (which will be satisfied in cases where compliance with the development condition will result in a mistake in describing the property or the Seller’s title to it).

It is important to note that the remedy afforded by clause 7.7(e), termination of the contract, will obviously only be available prior to settlement. This underscores the importance for buyers, where appropriate, to undertake searches from the local government revealing the currency of any development permit for the property. This will be most relevant to property developers purchasing development sites.

If you would like to know more about compliance with development conditions or any other town planning issues please do not hesitate to contact Dan Morton or William McKenzie.