On 25 October 2023, the Queensland Parliament passed the Property Law Act 2023 (New Act), a significant legislative overhaul aimed at updating the property laws in Queensland. This legislation supersedes the Property Law Act 1974 (Old Act), which has been in effect for nearly fifty years.
OBJECTIVE OF THE NEW ACT
The anticipated outcome of the New Act is to simplify the property laws in Queensland, aligning them with the standards of other Australian States. Its primary goal is to improve transparency and safeguard consumer interests in property transactions. This article will delve into the main discoveries and stipulations of this new legal framework.
Important changes include:
The introduction of a statutory seller disclosure scheme (Seller Disclosure Scheme)
Rules relating to leases will be updated, introducing additional protections for current and former lessees
Limitation period for actions brought based on a deed is reduced from 12 years to 6 years
The abolition of the rule against perpetuity for trusts over land in Queensland and the introduction of a fixed perpetuity period of 125 years
Various other changes and simplifications to rules relating to instalment contracts, adverse events under property contracts, and other matters.
SELLER DISCLOSURE REQUIREMENT
Traditionally in Queensland, buyers have borne the responsibility of conducting comprehensive due diligence investigations before concluding a property purchase, while sellers have had relatively minimal obligations in terms of disclosure.
The New Act brings about crucial modifications in seller disclosure requirements. Sellers of freehold land, encompassing units, are now obligated to provide clear and pertinent information about the property to prospective buyers before entering into a contract, referred to as "sellers disclosure."
What does this apply to?
It applies to sales of all freehold land, including sales by auction, subject to several exemptions.
What needs to be disclosed?
The seller will be required to provide the buyer with a disclosure statement and any prescribed certificates (Disclosure Documents) relating to the lot.
The disclosure statement needs to be in the prescribed form with completed information that is true at the time it is given to the buyer and be signed by the seller.
Disclosure Documents must encompass various certificates to affirm the accuracy of the provided information, such as title searches, registered survey plans, and, for properties in community title schemes, details about the body corporate, community management statements (CMS), and by-laws not included in the CMS.
Furthermore, additional certificates, including adjudicators' orders, pool compliance certificates, and notices from the Environmental Protection Agency and Queensland Building and Construction Commission, must be included in the disclosure statement. The legislation permits the provision of these documents in both physical and electronic formats, ensuring flexibility and convenience.
What happens if this is not complied with?
The buyer has the right to terminate the contract at any time before settlement if the seller fails to provide any of the Disclosure Documents at the relevant time, or provides Disclosure Documents that are inaccurate or incomplete regarding a material matter.
Exceptions to the Seller Disclosure Scheme
Exceptions to the Seller Disclosure Scheme include:
sales between related parties where the buyer voluntarily waives the requirement
sales between co-owners or neighbouring landowners when the purpose is a boundary realignment
sales mandated by a court order
transfers to personal representatives or beneficiaries under a will or due to the death of the property owner
contracts stemming from an option where the seller previously disclosed information to the buyer when entering into the option. This exemption applies only when the buyer under both the contract for the sale of the lot and the option for the sale of the lot are the same. If a nominee is appointed under an option, separate disclosure is necessary before the option is exercised
sales with a price exceeding $10 million (including GST) where the buyer consents to waive the requirement
sales by entities such as Brisbane City Council or another local government to recover overdue rates or charges. In such cases, the buyer is notified that the seller is exempt from providing the disclosure statement and required certificates
sales by the state where the buyer has been the property's tenant for at least three years, and the buyer receives a notice that the seller is not obligated to provide the disclosure statement and required certificates
sales to 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).
IMPACT ON LEASES
The New Act introduces a set of reforms with the objective of simplifying, rationalising, and increasing transparency in leasing regulations. These modifications are designed to improve the legal framework for tenants, landlords, and all parties engaged in leasing agreements.
A notable modification revolves around the responsibility of the Assignor under the original lease and their guarantor in the event where someone else subsequently takes over the lease. Previously, under common law, if Tenant A transferred their lease to Tenant B, who then passed it to Tenant C, Tenant A might remain liable for any lease violations committed by Tenant C. The New Act alters this scenario, eliminating the ongoing responsibility for breaches by any subsequent assignee, irrespective of prior agreements. Nevertheless, Tenant A and their guarantors remain responsible for breaches by Tenant B unless explicitly released from such obligations.
Consent to Assignment of Lease
The New Act changes the requirements for obtaining consent for lease assignments or other transactions involving lease or leased premises. These adjustments seek to ensure that lessors cannot unreasonably refuse consent. Alongside this provision, the New Act specifies:
a statutory timeframe within which lessors must communicate their decision regarding consent, typically one month after receiving comprehensive details of the lessee's request
granting lessees the right to pursue damages through the court in instances where lessors fail to provide consent decisions, unreasonably withhold consent, or impose conditions that are deemed unreasonable, unnecessary, or onerous.
TIME LIMITS - DEEDS RELATED ACTIONS
The limitation period for actions based on a deed will be reduced from 12 years to 6 years.
This change creates consistency in the limitation period for these commercial agreements and enhances legal clarity and fairness.
TRUSTS AND ABOLITION OF RULE AGAINST PERPETUITIES
The common law rule against perpetuities stipulates that an interest in property must be vested within 21 years after the death of a person alive at the time the interest was established.
The New Act modifies this rule by allowing the option to set a perpetuity period of up to 80 years. In the case of a trust, this implies that property can be held in trust for a maximum of 80 years from the date of the property's transfer to the trust.
The New Act takes a more extensive approach by abolishing the common law rule entirely and introducing a new fixed perpetuity period of 125 years, aligning with the United Kingdom. This 125-year period begins from the date of the property's transfer to the individual under the trust. The trust deed may still allow for a shorter perpetuity period.
Existing trusts have the option to "opt in" to the new fixed perpetuity period. If the trust terms grant the trustee the authority to modify the vesting date, the trustee can extend it to 125 years. In cases where the trustee lacks the power to alter the vesting date, all beneficiaries under the trust can collectively execute a deed to modify the vesting date and set it at 125 years.
It is essential to exercise caution and thoroughly evaluate any potential tax or duty implications when contemplating modifications to existing trust arrangements in light of these amendments.
ENFORCEABILITY OF EASEMENT COVENANTS
The existing legal framework states that a positive covenant within an easement is not legally enforceable against future property owners unless they explicitly consent to it.
To address this, a new provision, section 65, has been incorporated into the Act. This section renders covenants in registered easements, whether they are positive or negative and pertain to aspects such as land use, ownership, or maintenance, binding on future landowners, unless explicitly expressed as personal.
Section 65 is applicable to all easements, irrespective of their creation or registration date, ensuring the enforceability of these covenants on subsequent landowners.
The enactment of the Property Law Act 2023 (QLD) marks a substantial step forward in the modernisation of property laws in Queensland. Through the implementation of seller disclosure requirements and the creation of explicit protocols for information provision, this law seeks to foster a property market marked by openness and consumer-oriented practices.
Undoubtedly, these statutory revisions represent a significant advancement in real estate transactions within the State, potentially yielding favourable outcomes for both buyers and sellers in the real estate arena.
If you have any questions regarding this article, please contact a member of our team below.
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 article is accurate at the date it is received or that it will continue to be accurate in the future.
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