11 December 2023
NAVIGATING QUEENSLAND’S PROPERTY LAW LANDSCAPE: A COMPREHENSIVE LOOK AT THE 2023 REFORMS
Written By Dakota Raeburn
Key Takeaways
The Property Law Act 2023 (Qld) (‘the Act’) was passed on 25 October 2023 and will commence on a date set by proclamation (to be announced in the near future). The Act is designed to replace the outdated Property Law Act 1974 (Qld), aligning the State with contemporary standards.
With the imminent commencement of the Act, Queensland property laws are set for a comprehensive makeover; the primary focus being to place paramount emphasis on optimising transparency and enhancing buyer protection within property transactions.
Significant changes include:
- Enactment of a seller pre-contractual disclosure scheme coined to ensure transparency;
- Updates to leasing regulations providing extra safeguards for existing and past lessees;
- Changes to the enforceability of covenants;
- Abandonment of the rule against perpetuities of trusts; and
- Deed-based actions subject to changed time limitations.
Mandatory seller disclosure regime
One of the most notable transformations ushered in by the Act is the requirement of a seller disclosure statement, encompassing the sale of all freehold land, inclusive of sales by auction, however exceptions do apply.
Previously, Queensland has been characterized as a ‘buyer beware’ jurisdiction, placing the onus on buyers to undertake their own due diligence. Sellers, by contrast, bore minimal responsibility for disclosing any potential issues associated with the property.
The Act marks a departure from this concept, instigating a shift toward enhanced transparency and allowing buyers to make informed decisions prior to entering into a contract. The changes will also align Queensland with other Australian jurisdictions which already require that form of disclosure.
What does a seller have to disclose?
The requisite disclosure is required to be in the approved form of a statement as well as any prescribed certificates relating to the lot. The information inputted in the statement must be true at the time it is given to the buyer and must include the seller’s signature. See the link below to view the approved form.
Examples of certificates that could accompany the statement include, but are not limited to:
- Title searches;
- Registered survey plans;
- Body corporate information;
- Community management statements (‘CMS’);
- By-laws that are not contained in CMS;
- Adjudicators orders;
- Pool compliance certificates;
- Notices from the Environmental Protection Agency; or
- Notices from the Queensland Building and Construction Commission.
When and how do disclosure documents have to be provided?
All documents are required to be provided to the buyer of a property prior to the buyer signing the contract, which may be done either physically or electronically. In relation to properties acquired through auctions, special regulations apply to ensure the disclosure is provided in a timely manner for buyers to make informed decisions.
What are the consequences of non-compliance?
In the event there is a failure on the seller’s part to provide an accurate seller disclosure, buyers may be entitled to exercise their right to termination of the contract at any time before settlement. This will arise if a disclosure statement is either not provided to the buyer or the buyer goes on to uncover ‘material inaccuracies’ concerning the property that were not initially disclosed, provided that the buyer was not aware of the correct state of affairs at the time of signing and if the buyer had the requisite awareness, the contract would not have been executed. Furthermore, that termination and a right to a refund of the deposit and any interest paid are a buyer’s only remedies. That is, there is to be no right to compensation.
What are the exclusions to the disclosure?
The framework defines several categories that are to be excluded from disclosure, including:
- Sales mandated by a court order;
- Sales between co-owners or adjacent landholders for the purpose of boundary realignment;
- Sales between related parties where the buyer willingly forgoes the requirement;
- Transfers to personal representatives or beneficiaries pursuant to a will or resulting from the death of a property owner;
- Contracts originating from an option, provided that the seller gave disclosure to the buyer upon entering the option. This is applicable solely when the buyer in both the option for the sale of the property and the contract for the sale of the property remains unchanged. If a nominee is designated under an option, distinct disclosure is obligatory before the option is exercised.
- Sales with a contract price exceeding $10 million (including GST) where the buyer willingly forgoes the requirement;
- Sales by entities like the Sunshine Coast/Brisbane City Council or another local government, aiming to recoup overdue rates or charges. In these instances, the buyer will receive a notification that the seller is not obligated to furnish the disclosure statement and necessary certificates;
- Sales by the state where the buyer has been the property’s tenant for a minimum of three years; and
- Sales involving buyers who are publicly listed corporations (or subsidiaries of publicly listed corporations), the state, statutory bodies, or constructing authorities under the Acquisitions of Land Act 1967 (Qld).
Leases
The Act also heralds a wave of leasing reforms set to elevate the legal landscape for tenants and landlords promising a more dynamic and streamlined leasing experience.
Assignment liability
A pivotal change, restricted to leases initiated after the commencement of the Act, revolves around the liability of an initial lease assignor and their guarantor when the lease undergoes subsequent assignments to new parties. The common law has previously ruled that if Lessee 1 transferred their lease to Lessee 2, who subsequently conveyed it to Lessee 3, Lessee 1 could potentially remain accountable for any default of Lessee 3. However, the Act, will ensure that at the time of the assignment from Lessee 2 to Lessee 3, there will be a release of liability of Lessee 1 and their guarantors, solely in relation to breaches of the lease by Lessee 3. In the event that there are accrued breaches by Lessee 2, Lessee 1 will remain liable, unless this obligation is expressly waived. Landlords may choose to address this modification by integrating clauses into the lease that specify that, for consent to an assignment to be granted, the assignee must furnish new guarantors or security.
Landlord consent
Another noteworthy amendment is to the obligations for acquiring consent for lease assignments or other transactions involving the lease or premises. The amendments are an extension of the prevailing principle present in the Property Law Act 1974 (Qld), ultimately reinforcing that lessors are prohibited from unreasonably withholding consent. Specifically, lessors will now have to abide by a statutory timeframe (typically one month after receiving the details of the request) to provide their decision on whether they choose to consent or not to the lessee’s request. If a situation arises in which a lessor fails to provide consent decisions, unreasonably withholds consent, or imposes unreasonable, unnecessary, or onerous conditions, a lessee will possess the right to seek damages. These provisions will apply from the date of commencement regardless of the date of entry into the lease.
Covenants in leases
The Act aims to clarify the enforceability of covenants within a lease, after a tenant’s assignment or a landlord’s reversion sale. The concepts of covenants that ‘touch and concern the land’ will no longer be relevant, instead the benefit and burden of all covenants will be held to run with the land unless:
- The lease term is explicitly stated to be personal to the parties; or
- The lease term excludes the operation of the Act; or
- The lessor and transferer or the lessee and assignee agree in writing that either the benefit of a term remains with the lessor or that the benefit of the term remains with the lessee.
Easements: Enforceability of covenants
Under the Property Law Act 1974 (Qld), positive covenants in easements generally lack enforceability against successors in title. To establish the obligatory nature of covenants within registered easements, the Act will ensure both positive and negative covenants concerning the ‘use, ownership or maintenance’ of the encumbered land are enforceable against future landowners. Provided the covenant is not expressed to be personal, the new section will apply to all easements irrespective of their creation or registration date.
Trusts: The abandonment of the rule against perpetuities
The existing common law principle against perpetuities stipulates that an interest in property must vest within 21 years following the death of a person alive at the time the interest was established. The Act substitutes this with a predetermined duration of 125 years, commencing from when the property is placed into the trust, facilitating increased adaptability in trust structuring and planning.
For existing trusts, the adoption of the new rule can be achieved either by the adjustment of the vesting date, enabled by the trustee’s authority or by formulating a new legal document with unanimous agreement from all beneficiaries. However, it must be acknowledged that potential duty and taxation implications will need to be considered when amending existing trust arrangements in response to these revisions.
Deed-based actions: Time limitations
Within the sphere of deed-based actions, the Act synchronises the limitation period with that of contract-based actions. The timeframe is set to decrease from twelve years to six years, establishing consistency across both types of commercial agreements.
How we can assist
In anticipation of the forthcoming commencement date of the Property Law Act 2023 (Qld), it is imperative for property owners and all stakeholders involved in property transactions to have a comprehensive understanding of their responsibilities. Our team at JHK Legal are well-versed in the intricacies of the Act and look forward to providing expert guidance on interpreting, applying and complying with the new regulations.
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