30 October 2023
On Wednesday 25 October 2023, the Queensland Parliament passed the Property Law Act 2023 (the new Act), a landmark legislative reform designed to modernise the state’s property laws. This legislation supersedes the Property Law Act 1974 (the Old Act), which has been in effect for nearly five decades.
The new Act is expected to streamline property laws in Queensland, bringing them into alignment with the regulations of other Australian states, with it’s primary objective being the enhancement of transparency and consumer protection in property transactions. In this article, we will explore the key findings and provisions of this legislation.
Do modifications to the disclosure requirements for land sales in Queensland suggest a departure from the 'buyer beware' principle?
In Queensland, the onus has traditionally rested on buyers to conduct thorough due diligence investigations before finalising a property purchase, with sellers having relatively limited responsibilities in terms of disclosure.
The new Act introduces essential changes regarding seller disclosure. Sellers of freehold land, including units, must give clear and relevant details about the property to potential buyers before signing a contract known as “sellers disclosure”.
When sellers fail to provide accurate seller disclosure, buyers may be entitled to contract termination rights if they uncover 'material inaccuracies' that were not initially disclosed. It's important to note that once the initial disclosure is made, sellers are not obligated to provide additional information. This provision is designed to enhance transparency in property transactions and empower buyers to make informed decisions.
Special regulations are also established for properties acquired through auctions, ensuring timely seller disclosure to equip potential buyers with the necessary information for making informed choices.
New prescribed form and certificates
Under the new Act, sellers must use an approved format for their disclosure. They must provide a signed seller disclosure statement as part of this process. This statement should include various certificates to confirm the accuracy of the information provided. These certificates may involve documents like title searches, registered survey plans, and, for properties in community title schemes, information about the body corporate, community management statements and by-laws that are not in the CMS.
Additionally, other certificates including adjudicators' orders, pool compliance certificates and notices from the Environmental Protection Agency and Queensland Building and Construction Commission, are required to be part of the disclosure statement. The legislation also allows for the provision of these documents in both physical and electronic formats, ensuring flexibility and convenience.
Sales excluded from the statutory seller disclosure scheme
The proposed scheme outlines several categories that are exempt from its requirements, including:
The new Act also ushers in a series of reforms aimed at simplifying, rationalising and making leasing regulations more transparent. These changes seek to enhance the legal landscape for tenants, landlords and all parties involved in leasing arrangements.
A significant change concerns the responsibility of the original lease assignor and their guarantor if someone else later takes over the lease. In the past according to common law, if Tenant A passed their lease to Tenant B who then passed it to Tenant C, Tenant A might still be held responsible for any lease violations by Tenant C. The new Act changes this and removes the ongoing responsibility for breaches by any subsequent assignee, regardless of previous agreements. However, Tenant A and their guarantors are still accountable for breaches by Tenant B unless they are explicitly released from these obligations.
Consent to lease assignment
The new Act also introduces changes to the requirements for obtaining consent for lease assignments or other dealings involving the lease or leased premises. These modifications build upon the existing principle found in the current Act, ensuring that lessors cannot unreasonably withhold their consent. In addition to this requirement, the new Act stipulates:
Time limitations for deed-based actions
In the realm of deed-based actions, the new Act aligns the limitation period with contract-based actions. The limitation period for actions based on a deed will be reduced from 12 years to six years. This change creates consistency in the limitation period for these commercial agreements and enhances legal clarity and fairness.
Trusts and the abolition of the common law rule against perpetuities
The new Act makes a significant change regarding trusts by getting rid of the old rule against perpetuities. This rule used to require property interests to be established within 21 years after someone's death who was alive when the interest began. The new Act replaces this with a set period of 125 years starting from when the property is put into the trust. This change allows for more flexibility in trust planning and enables longer-term strategies.
Existing trusts can choose to follow this new fixed 125-year rule by either adjusting the vesting date through the trustee's authority or by creating a new legal document with the unanimous agreement of all beneficiaries. However it's important to be aware of potential tax and duty implications when changing existing trust arrangements in light of these changes.
The current law says that a positive promise within an easement can't be legally enforced on future property owners unless they agree to it. To fix this, section 65 of the Act has been added. It makes covenants in registered easements (whether they're positive or negative and related to land use, ownership, or upkeep) binding on future landowners, except when they're specifically personal.
Section 65 applies to all easements, regardless of when they were created or registered and it makes these covenants enforceable on future landowners. This ensures clear and consistent property rights and responsibilities.
The Property Law Act 2023 represents a significant stride in the modernisation of property laws in Queensland. With its introduction of seller disclosure requirements and the establishment of clear procedures for information provision, this legislation aims to cultivate a property market characterised by transparency and consumer-friendliness. These legislative changes undeniably stand as a noteworthy development in property transactions within the state, holding the potential to bring about positive changes that benefit both buyers and sellers in the real estate market.
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The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.