Buyer's Handbook
Residential Property Purchase Guide - Queensland
This handbook provides essential information about your rights and obligations when purchasing residential property in Queensland. Please read this guide carefully alongside your contract documents.
Please read this handbook together with our initial letter and all attachments. It contains essential information about your rights and obligations when buying property.
We may advise you during your transaction on your rights, such as rights to terminate the contract or claim compensation from the seller. These rights can be subject to strict time limits or lost as a result of your actions or steps in the transaction.
Important:
If you have any questions about this information, please contact us immediately. Time-sensitive decisions may need to be made during your transaction.
Important Warning
A finance condition is not an automatic escape clause. Terminating a contract based on finance requires you to have genuinely and diligently pursued finance approval. Wrongful termination can result in you losing your deposit and facing a claim for damages.
Your Obligations Under a Finance Condition
When your contract contains a finance condition, you have a legal obligation to take all reasonable steps to obtain finance approval. This is not merely a suggestion—it is an implied term of the contract that courts will enforce.
- Apply for finance promptly after signing the contract—ideally within days, not weeks
- Apply to a reputable lender on reasonable commercial terms
- Provide complete and accurate information to your lender
- Respond promptly to all lender requests for additional documents
- Consider alternative lenders if your first application is declined
- Do not take actions that undermine your application (e.g., making large purchases, changing jobs)
"Unsatisfactory Terms" Is Not Enough
A common misconception is that you can terminate simply because the loan terms offered are not what you hoped for. This is incorrect in most cases.
The standard REIQ contract requires that finance be obtained "on terms satisfactory to the buyer." However, courts have held that:
- You cannot subjectively decide terms are unsatisfactory to escape the contract
- Terms must be objectively unreasonable or genuinely unaffordable
- Higher interest rates than expected do not automatically make terms "unsatisfactory"
- Minor variations from your ideal terms do not justify termination
What Constitutes Wrongful Termination?
The seller may challenge your termination and claim your deposit (or more) if:
- You failed to apply for finance at all, or applied too late
- You applied to an unsuitable lender or for an inappropriate loan product
- You did not provide required documents to your lender in a timely manner
- You took actions that caused your application to be declined
- You rejected reasonable finance approval
- You used the finance condition to exit for unrelated reasons (e.g., changed your mind, found another property)
Queensland Case Law
Meehan v Jones (1982) 149 CLR 571
The High Court established that a finance condition requires the buyer to act in good faith and take all reasonable steps to obtain finance. A buyer cannot simply "go through the motions" without genuinely attempting to secure approval.
Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537
The High Court held that where a contract is subject to a condition, the party who benefits from that condition must do all that is reasonably necessary to procure its fulfilment. Failure to do so means the condition is deemed satisfied.
Brown v Heffer (1967) 116 CLR 344
The Court found that a buyer who claims to have been unable to obtain finance must prove they made proper attempts through appropriate channels and were genuinely refused.
Sandra Investments Pty Ltd v Booth (1983) 153 CLR 153
Reinforced that the duty to take reasonable steps is an implied obligation. A buyer who does not genuinely pursue finance cannot rely on non-approval to terminate.
Foran v Wight (1989) 168 CLR 385
Established important principles about readiness and willingness to complete contracts, relevant when finance conditions interact with settlement obligations.
Consequences of Wrongful Termination
If a court finds your termination was wrongful, you may face:
- Forfeiture of deposit—the seller may keep your entire deposit
- Damages claim—if the seller resells at a lower price, you may be liable for the difference
- Legal costs—you may be ordered to pay the seller's legal costs
- Specific performance—in rare cases, a court may order you to complete the purchase
Best Practice Recommendations
- Obtain pre-approval before signing a contract wherever possible
- Keep detailed records of all finance applications and communications
- Apply to multiple lenders if your first application encounters issues
- Seek legal advice before terminating under a finance condition
- Provide us with copies of any loan decline letters immediately
- Never assume the finance condition is an "easy out"—treat it seriously
Key Point
A building and pest condition gives you the right to terminate if inspections reveal issues—but this right is not unlimited. You must act reasonably and within the timeframes specified in your contract.
Your Rights Under a Building & Pest Condition
The REIQ contract typically allows you to terminate if building or pest inspections reveal defects that are "not acceptable" to you. However, this does not mean you can terminate for any minor issue.
- You must obtain inspections from licensed, qualified inspectors
- Inspections must be completed within the specified timeframe (typically 7-14 days)
- You must provide written notice of termination before the condition date expires
- You should keep copies of all inspection reports as evidence
What Constitutes a "Major Defect"?
While contracts vary, courts and industry practice generally recognise these as significant issues:
- Structural defects—cracking foundations, subsidence, major wall cracks
- Active termite infestation or significant termite damage
- Major roof defects—structural issues, not just minor repairs needed
- Significant water damage or ongoing moisture problems
- Asbestos in poor condition requiring immediate remediation
- Non-compliant building work that poses safety risks
- Electrical or plumbing defects that are hazardous
What Is NOT Typically Grounds for Termination?
- Minor cosmetic issues (paint, carpet wear, minor cracks)
- Normal wear and tear for the property's age
- Issues that were visible at inspection and should have been apparent
- Maintenance items (gutters needing cleaning, gardens overgrown)
- Minor repairs under a few hundred dollars
The "Reasonableness" Test
Courts have held that a buyer's decision to terminate must be reasonable in all the circumstances. Factors considered include:
- The age and condition of the property when you inspected it
- The purchase price and what a reasonable buyer would expect
- The cost of repairs relative to the purchase price
- Whether defects were obvious or hidden
- Whether you're using the condition as a pretext to exit for other reasons
Queensland Case Law
Turner v Good (1990) 2 Qd R 502
Established that the right to terminate under a "subject to" condition must be exercised in good faith. A buyer cannot use a condition as a mere escape route.
Gumland Property Holdings v Duffy Bros Fruit Markets (2008) 234 CLR 237
The High Court confirmed that contractual discretions must be exercised honestly and not arbitrarily or capriciously. This applies to decisions about whether inspection results are "satisfactory."
Godecke v Kirwan (1973) 129 CLR 629
A party benefiting from a condition precedent cannot prevent its fulfilment then rely on non-fulfilment. If you prevent proper inspections, you may lose termination rights.
Practical Tips
- Book inspections as soon as contracts are signed—don't wait until the last day
- Attend the inspection if possible to ask the inspector questions
- Get quotes for any repair work identified before making a decision
- Consider negotiating with the seller for a price reduction instead of terminating
- Seek legal advice before terminating if the issues are borderline
When you buy an apartment, townhouse, or unit in Queensland, you become a member of the body corporate (also known as an owners corporation or strata scheme). Understanding your rights and obligations is essential.
What Is a Body Corporate?
A body corporate is the legal entity that manages the common property and shared aspects of a community titles scheme. All lot owners are automatically members.
- Common property—shared areas like lobbies, pools, gardens, driveways, roofs, and external walls
- Lot property—your individual apartment or unit
- The body corporate is responsible for maintaining and insuring common property
- Decisions are made collectively by lot owners at general meetings
Body Corporate Levies
As a lot owner, you must pay levies to fund the body corporate's operations:
Administrative Fund
Covers day-to-day expenses: insurance, gardening, cleaning, management fees, utilities for common areas.
Sinking Fund (Capital Works Fund)
Reserves for major repairs and replacements: roof, lifts, repainting, pool resurfacing. A healthy sinking fund is essential.
Warning: Low levies may seem attractive but can indicate under-funding. This leads to special levies when major works are needed—sometimes tens of thousands of dollars.
What to Check in the Disclosure Statement
- Current levy amounts and contribution schedule
- Sinking fund balance—is it adequate for the building's age?
- Sinking fund plan—what major works are planned?
- Outstanding debts—are any owners in arrears?
- Current or proposed special levies
- Minutes of recent meetings—any disputes or major issues?
- Insurance details—is cover adequate?
- Any current litigation involving the body corporate
By-Laws
By-laws are the rules governing the scheme. All lot owners and occupiers must comply. Common by-laws cover:
- Pets—many schemes have restrictions or require approval
- Renovations—approval often required, even for internal works
- Noise—restrictions on noise levels and times
- Parking—rules about visitor parking and vehicle types
- Short-term letting—some schemes restrict or prohibit Airbnb-style rentals
- Use of common areas—rules about pools, gyms, BBQ areas
Important: Read the by-laws carefully before buying. If something is important to you (keeping a pet, running a home business, short-term letting), confirm it is permitted.
Your Rights as an Owner
- Vote at general meetings on matters affecting the scheme
- Stand for election to the committee
- Access body corporate records and financial statements
- Challenge unreasonable decisions through dispute resolution
- Receive notice of meetings and proposed motions
Red Flags to Watch For
- Very low levies for an older building—likely under-funded
- Small or depleted sinking fund—expect special levies
- High level of owner arrears—cash flow problems
- Ongoing litigation or disputes
- Major works flagged but not funded
- Combustible cladding or other building defects identified
- Restrictive by-laws that conflict with your intended use
A pre-settlement inspection (also called a final inspection) is your opportunity to check the property's condition before settlement. It is an important step that should not be skipped.
Your Right to Inspect
Under the REIQ contract, you have the right to inspect the property within 3 business days before settlement. This inspection should be arranged through the real estate agent.
- Give reasonable notice to arrange access
- The seller must provide access at a reasonable time
- You can bring someone with you (partner, family member, tradesperson)
- Take photos or video to document the condition
Pre-Settlement Inspection Checklist
General Condition
- Property is in the same condition as when you signed the contract
- No new damage to walls, floors, ceilings, or fixtures
- Property has been reasonably maintained
- All rubbish has been removed
- Gardens have not been neglected or damaged
Included Items (Check Against Contract)
- All fixtures listed in the contract are present (light fittings, blinds, curtains)
- Appliances included in the sale are present and working
- Air conditioning units, ceiling fans, and similar items are in place
- Pool equipment, garden sheds, or other listed items are present
Functionality
- All lights and power points work
- Hot water system is working
- Taps, toilets, and plumbing fixtures work without leaks
- Stove/cooktop and oven are working
- Air conditioning and heating systems work
- Garage doors and gates operate correctly
- Smoke alarms are present and working
Security
- All doors and windows lock properly
- Security systems work (if included)
- All keys are available and accounted for
External Areas
- Pool and spa equipment work (if applicable)
- Fencing is intact
- No new damage to driveways or paths
- Outdoor lighting works
What If You Find Problems?
If you discover issues during your pre-settlement inspection:
- Document everything—take photos and detailed notes
- Report immediately—notify us and the agent straight away
- Minor issues—may be addressed with a retention (money held back) or undertaking from the seller
- Major issues—may warrant delaying settlement until resolved
- Missing items—seller may need to replace or compensate you
Important Limitations
- The pre-settlement inspection is not a substitute for a building inspection
- You are checking that the property is in the same condition, not discovering hidden defects
- Items present when you signed the contract should still be there
- You generally cannot refuse to settle over pre-existing conditions you knew about
Practical Tips
- Schedule the inspection as close to settlement as practical
- Bring a copy of the contract and list of included items
- Test everything—don't just look at it
- Turn on taps, flush toilets, test every light switch
- Open and close all doors and windows
- Check inside cupboards and storage areas
- Allow at least 30-45 minutes for a thorough inspection
When two or more people purchase property together, how the title is held has significant legal and practical implications. Understanding the difference between the two main types of co-ownership is essential.
Joint Tenants
- Each owner owns the whole property together
- Right of survivorship—if one owner dies, their share automatically passes to the surviving owner(s)
- Cannot leave your share to someone else in your will
- Most common for married couples and partners
- Each owner has equal rights to the whole property
Tenants in Common
- Each owner owns a specific share (e.g., 50/50 or 60/40)
- No right of survivorship—your share forms part of your estate
- You can leave your share to anyone in your will
- Common for business partners, investors, or blended families
- Shares can be equal or unequal
What Happens on Death?
Joint Tenants
The deceased's share automatically transfers to the surviving owner(s) by operation of law. This happens outside of the will and estate administration process. The surviving owner simply needs to register the death with the titles office.
Tenants in Common
The deceased's share becomes part of their estate and passes according to their will (or intestacy laws if there is no will). The beneficiary may end up co-owning the property with the surviving original owner(s).
What Happens on Separation?
If co-owners separate (married couples, de facto partners, or business partners), the property typically needs to be dealt with as part of the separation:
- One party buys out the other—requires refinancing and transfer
- Property is sold—proceeds divided (per agreement or court order)
- Continued co-ownership—sometimes agreed for a period
- The type of co-ownership does not change entitlements under family law
Changing the Type of Ownership
You can change from joint tenants to tenants in common (called "severing" the joint tenancy) by:
- Registering a notice of severance with the titles office
- Agreement between the owners
- One owner can sever unilaterally by transferring their interest
Note: Changing from tenants in common to joint tenants requires all owners to agree and may have stamp duty implications.
Unequal Contributions
If owners contribute unequal amounts (deposit, mortgage payments, renovations), consider:
- Tenants in common with unequal shares reflecting contributions
- A co-ownership agreement documenting contributions and arrangements
- What happens if one party pays more of the mortgage over time
- How improvements and maintenance costs will be shared
Which Should You Choose?
Choose Joint Tenants if:
- You are married or in a committed relationship
- You want your share to pass automatically to your partner on death
- You both have equal interest and contributions
Choose Tenants in Common if:
- You want to leave your share to children from a previous relationship
- You are purchasing with a business partner or friend
- Contributions are unequal and you want shares to reflect this
- You want estate planning flexibility
Important Considerations
- Your choice affects tax, estate planning, and asset protection—seek advice
- Review your wills when purchasing property as co-owners
- Consider a co-ownership agreement if buying with friends or family
- Lenders treat both types the same for mortgage purposes—all owners are jointly liable
- Changing the ownership structure later may have stamp duty or CGT implications
Risk in the property generally passes to you from the date of the contract, not settlement. This means you bear the risk of any damage to the property from that date.
Recommendation:
We strongly recommend you obtain building insurance from the date of contract to protect your interest in the property. Notify your insurer of your insurable interest as a purchaser.
The seller is required to maintain their existing insurance until settlement, but their policy may not fully protect your interests.
Under the Property Occupations Act 2014 (Qld), you may have a statutory cooling-off period of 5 business days from when you receive a signed copy of the contract.
If you terminate during the cooling-off period:
- You may forfeit 0.25% of the purchase price to the seller
- Written notice must be given to the seller or their agent
- The balance of your deposit will be refunded
Cooling-off may not apply if:
- The property is sold at auction
- You purchased within 2 business days before or after auction
- You waived cooling-off rights with legal advice
- The contract relates to certain commercial or rural properties
Most property transactions in Queensland are now settled electronically through PEXA (Property Exchange Australia). This provides a secure, efficient, and streamlined settlement process.
Key benefits include:
- Real-time settlement and title transfer
- Reduced risk of settlement delays
- Immediate confirmation of completion
- Secure electronic verification of identity
You will need to verify your identity before settlement. We will guide you through this process, which may include in-person verification or video verification.
We conduct various searches to identify matters that may affect the property or your intended use. These may include title searches, survey searches, council searches, and various government authority searches.
Buyer Beware:
The contract may not protect you against all adverse search results. Some matters are discoverable through searches but do not give you rights to terminate. It is important to review search results carefully and raise any concerns promptly.
Key search considerations:
- Present use may differ from your intended use
- Future development in the area may affect the property
- Unregistered encumbrances may exist
- Environmental considerations may apply
Many documents can now be signed electronically. We may send documents for electronic signature via secure platforms. Electronic signatures are legally valid for most conveyancing documents in Queensland.
We will prepare transfer documents for registration at the Queensland Land Registry. Through electronic conveyancing, these are digitally signed and lodged. You will need to complete verification of identity before these documents can be signed on your behalf.
Early possession (moving in before settlement) is generally not recommended as it can create legal complications. If the seller agrees to early possession:
- You will typically need to pay a licence fee or rent
- You may be liable for damage from the date of possession
- Insurance arrangements become more complex
- Your rights may be affected if settlement does not occur
Seek specific advice if you are considering early possession.
If the property has a swimming pool, Queensland law requires:
- A valid Pool Safety Certificate for the sale of a property with a non-shared pool
- Pool safety barriers that comply with the current standard
- Registration on the Queensland Pool Safety Register
What is a "swimming pool"? Includes any excavated or enclosed structure containing water to a depth greater than 300mm intended for swimming.
Sellers must provide a Pool Safety Certificate or Form 36 (Notice of No Pool Safety Certificate) before settlement. Without a valid certificate, you cannot rent the property.
If you are a foreign person (not an Australian citizen, permanent resident, or New Zealand citizen), you may need approval from the Foreign Investment Review Board (FIRB) before purchasing property.
Additional Foreign Acquirer Duty (AFAD): Foreign purchasers are liable to pay an additional surcharge on transfer duty (currently 8% of the property value) in addition to standard transfer duty.
Notify us immediately if you are or may become a foreign resident.
If the property is sold with an existing tenancy:
- You take over as landlord under the existing lease
- The tenant's bond is transferred to you at settlement
- You inherit the rights and obligations under the lease
- Rent increases are limited by legislation
Review the tenancy agreement carefully before signing the contract. Consider the remaining term, rental amount, and tenant history.
If an adverse event occurs before settlement (such as natural disaster, fire, or significant damage to the property), specific provisions in your contract may apply. Contact us immediately if you become aware of any damage to the property before settlement.
Town planning matters can significantly affect your use of the property. Searches may reveal zoning, overlays, and planning scheme provisions that affect:
- Permitted uses of the property
- Building height and setback requirements
- Development restrictions
- Heritage overlays
- Flood mapping
If you intend to develop or change the use of the property, seek specific planning advice before committing to the purchase.
Properties near agricultural, industrial, or commercial areas may be affected by urban encroachment provisions. These may limit your ability to complain about noise, odours, or other impacts from nearby operations. Check searches and disclosures for any such provisions.
The unimproved value of land is assessed by the Valuer-General and used for calculating land tax and council rates. You may object to the valuation if you believe it is incorrect.
Land Tax: If you own land above the tax-free threshold, you may be liable for annual land tax. Principal place of residence is generally exempt. Companies and trusts have different thresholds.
Under the Personal Property Securities Act (PPSA), certain items included in the sale (such as solar panels, hot water systems, or equipment) may be subject to security interests registered on the Personal Property Securities Register (PPSR).
We will search the PPSR before settlement and ensure any registered interests are released at or before settlement.
Following concerns about building fires, legislation now requires disclosure of combustible cladding on buildings. Under the Building Regulation 2006 (Qld):
- Sellers must disclose if a building has been identified as having combustible cladding
- Rectification notices may require removal or remediation of cladding
- Buildings may be subject to ongoing inspection and compliance requirements
If the property is in a multi-storey building, check with the body corporate and review disclosure documents for any cladding issues.
Need Assistance?
If you have any questions about the information in this handbook or your specific transaction, please contact your lawyer at Baystone Legal.
Email: conveyancing@baystonelegal.com
Phone: +61 7 3103 9882
This information is general in nature and should not be relied upon as legal advice.
Please contact your lawyer for advice specific to your circumstances.