Announced BCIPA Reforms

The Queensland Government has recently announced reforms to the Building and Construction Industry Payments Act (2004) (‘BICPA’) following a review in 2012. The amendments will come into effect later this year with legislation still being finalised. The announced reforms include:

·         The Queensland Building and Construction Commission will appoint adjudicators to particular cases instead of claimants nominating adjudicators.

·         The time for serving a payment claim will reduce from 12 to six months after the construction work was carried out or the goods and services supplied, unless there is provision in the contract lengthening this time.

·         The time to serve a claim will vary depending on the value of the claim. For claims greater than $750,000 the respondent will have:

o   15 business days (increased from 10) to provide a payment schedule or 30 business days if the claim was served more than 91 days after the reference date of the contract.

o   15 business days to provide an adjudication response which the adjudicator can increase by a further 15 days.

·         For claims under $750,000 the respondent has:

o   10 business days to provide a payment schedule  (increased from 5)

o   10 business days to provide an adjudication response

·         In their adjudication response, respondents will be able to include all relevant reasons for withholding payment and claimants will have a right to reply.

The Queensland government has proposed that contracts entered into before September 1^st 2014 will remain unaffected by the changes, while contracts entered into post September 1^st will be subject to the reforms. 

Due to the changes in time frames and implications for contracts, industry participants will need to consider what changes should be made to their contracts in conjunction with legal advice.

The reforms remain the subject of parliamentary debate with a possibility of further changes.

Instalment Contracts - Applying for the First Home Owner Grant

 

At Aylward Game Solicitors we offer experienced advice and tailored document preparation in relation to Instalment Contracts and various types of Option Agreements.

Unlike standard REIQ contracts for the sale of residential houses, units or land where settlement generally occurs within a short period of time and occupation is taken on completion of the contract, Instalment Contracts generally run for an extended period of time and occupation is taken at the start of the contract with an agreed amount of instalments made to the owner over the life of the contract to pay the balance of the purchase price.

Once an Instalment Contract has been signed and been in existence for approximately one year, many sellers and buyers start to ask the common question:  Can I receive the First Home Owner Grant (“FHOG”) yet and how do I apply for it?

There is no standard answer to this question as the time when a buyer can apply for and receive the FHOG varies and is different with each Instalment Contract. The public OSR ruling for claiming the FHOG under Instalment Contracts sets out the requirements which a buyer must meet in order to be eligible to apply for (and subsequently receive) the grant prior to completion of the contract. An extract we have taken from that OSR ruling sets out the following:-

“  a.    The contract has been in existence for at least one year.

b.    The purchaser is not in default under the contract so that the vendor has no right to cancel the contract.

c.    The purchaser has occupied the home as their principal place of residence under the contract.

d.    The purchaser has paid to the vendor an amount of not less than the amount of the grant or an amount which is equal to at least 10% of the purchase price, whichever is the greater. In calculating the amount paid to the vendor, any of the following can be taken into account:

                       i.       any deposit paid by the purchaser to the vendor

                      ii.       any interest paid by the purchaser to the vendor

                     iii.       any other amounts which have been paid and deducted from the balance of the purchase price”.

Furthermore, the public OSR ruling sets out that a grant paid prior to completion of an Instalment Contract will be paid subject to certain conditions being met.  An extract of those conditions of payment are as follows:-

“  a.    The contract will be completed and will not be cancelled or terminated.

b.      Following payment of the grant, the purchaser will meet the residence conditions:

                       i.       For contracts entered into before 1 January 2004, the residence condition is that the purchaser will remain in possession of the home as their principal place of residence and will continue in possession following completion of the contract.⁷

                      ii.       For contracts entered into on or after 1 January 2004, the residence conditions are that the purchaser will remain in possession of the home as their principal place of residence and will continue in possession following completion of the contract for a continuous period of at least 6 months.⁸

c.      Within 14 days of non-compliance with conditions (a) or (b), the purchaser will notify the Commissioner of non-compliance and will repay the grant”.

Once a buyer has satisfied all requirements set by the Commissioner they will either apply for the FHOG themselves or have their solicitor assist in the application, then once successful in receiving the grant funds it will be paid to the relevant party/s in accordance with the terms of their respective Instalment Contract.

There are many factors and conditions which apply to claiming the FHOG under an Instalment Contract, and we advise not all of those conditions are covered in this Article. Determining an individual’s eligibility to receive the FHOG requires a full review and assessment of each individual contract document together with assessment of the supporting evidence (as applicable) and ultimately the Commissioner will make a final assessment as to whether or not an application is approved. Full details of OSR’s public ruling can be found on the Office of State Revenue website (for convenience we include the following direct link):

http://www.osr.qld.gov.au/legislation-rulings/public-rulings/fhog/fhoga019-1.shtml

If you wish to discuss or require assistance in applying for a First Home Owners Grant, then please contact our conveyancing manager Libby Dessaix or our Solicitor Mark Game on (07) 3236 0001.

This information contained in this article is correct as at publication date 13 March 2014. The information is a guide only and is not to be taken as legal advice and at all times we recommend you seek independent legal advice regarding your own individual circumstances from your legal representative.