More changes to property law in Queensland: Land Sales and Other Legislation Amendment Bill 2014 passed
Nov 2014 |
The Land Sales and Other Legislation Amendment Bill 2014 (Qld) (LSOLA) was passed by the Queensland parliament on 9 September 2014 and will commence on the same date as the Property Occupations Act 2014 (Qld),
1 December 2014.
The changes made by the LSOLA will impact on legislation including:
- Land Sales Act 1984 (Qld) (LSA);
- Property Occupations Act 2014 (Qld),
- Property Law Act 1974 (Qld) (PLA);
- Body Corporate and Community Management Act 1997 (Qld) (BCCMA); and
- Legal Profession Act 2006 (Qld).
Some of the more significant changes made by the LSOLA are highlighted below.
Land Sales Act will no longer apply to lots in Community Titles Schemes
The LSA will no longer apply to sales of proposed lots in a community title or group title scheme and regulations regarding those lots will be moved to provisions newly inserted into the BCCMA, the Building Units and Group Title Act 1980 (Qld) and the South Bank Corporation Act 1989 (Qld).
All disclosure requirements for the sale of proposed lots in a Community Titles Scheme will now be included in the BCCMA.
Sale of proposed lots in Community Titles Schemes
Deposits can be up to 20 percent of the purchase price
Currently under the PLA, deposits which exceed 10% of the purchase price can be construed as instalment contracts under the PLA or may be considered a penalty, leaving the seller unable to retain the deposit if the buyer defaults.
The amendments made by the LSOLA will allow sellers to require buyers to pay deposits of up to 20% of the purchase price, without triggering the requirements for instalment contracts under the PLA, or the deposit being considered to be a penalty.
5½ years to provide registrable transfer for Lot in Community Titles Scheme
Currently under the LSA, a registrable transfer of a lot in a Community Titles Scheme purchased ‘off-the-plan’ is required to be provided to a buyer by 3½ years from the date the buyer enters into the contract, unless that period has been extended to 5½ years under a regulation and the Buyer is notified of that extended timeframe before it enters into the contract.
The LSOLA amendments to the BCCMA amend this requirement by:
- increasing the date by which a seller must provide a buyer with a registrable transfer to 5 ½ years from the date the buyer enters into the contract, where the contract provides for a date by which the seller must give the buyer a registrable transfer (Sunset Date); and
- prescribing a 3½ year Sunset Date from the date the buyer enters into the contract, where a Sunset Date is not specified in the contract.
If the buyer requests a later date for settlement than the Sunset Dates prescribed above, and the seller agrees, the Sunset Date would be the later agreed date.
The change will mean that parties to a contract for the sale of a lot in a Community Titles Scheme will be able to agree on their own timeframes for when registrable transfers must be provided by, as long as the agreed timeframe does not exceed 5½ years from the contract date.
Buyers will continue to have the right to terminate the contract if the registrable transfer is not supplied to them within the required time.
Changes for sale of proposed lots (parcels of land)
Development approval
The LSOLA amendments means that there is no longer a restriction on selling land where a development approval for the proposed development has not yet been obtained. The new requirements (contained in s 12 of the LSA as amended) for the disclosure statement, simply require the seller to disclose whether a development approval has been granted.
Disclosure requirements – options
The current position under the LSA with respect to disclosure requirements under an option agreement is somewhat uncertain. To strictly comply with the LSA requirements, a seller is arguably required to provide the prescribed disclosure material for a proposed parcel of land or lot in a Community Titles Scheme to a prospective buyer on both entry into the option to purchase the proposed lot and again to the same buyer when a contract is subsequently formed on the exercise of an option.
Amendments by the LSOLA now clarify that prescribed disclosure documentation is not required to be provided when the same parties to an option agreement subsequently enter into a contract for the sale of the same proposed parcel of land or lot in a Community Titles Scheme as that contemplated in the option agreement.
Disclosure statement to prospective buyer of a proposed lot
While the LSA currently requires sellers to ‘identify’ a proposed parcel of land or lot in a Community Titles Scheme in the disclosure material, it does not describe what details are required to be disclosed in order to meet that requirement.
Once the changes made by the LSOLA come into effect, the BCCM and LSA will both prescribe the information which must be disclosed to a buyer of a proposed parcel of land or lot in a Community Titles Scheme.
Automatic LSA exemption for sales arising from subdivision into not more than five lots
Currently under the LSA, a buyer or seller can apply to the Office of Fair Trading for an exemption from the disclosure and trust account provisions of the LSA for a sale of a proposed parcel of land which is part of a reconfiguration of land into five lots or less.
Because the changes made to the LSA by the LSOLA result in the LSA not applying to the sale of a proposed lot if it arises from the reconfiguration of land into not more than five lots, there is no longer a requirement to formally make an application for an exemption.
That is, there will be no prescribed disclosure requirements under the LSA for the sale of proposed lots in a subdivision of five lots or less.
This change in particular will be welcomed to streamline the sale of small scale subdivisions where the requirement for the legislative exemption was seen as a largely beauraucratic step which did not provide any substantive additional protection for purchasers.
Disclosure obligations relating to lots in Community Title Scheme developments will be moved into the BCCM Act
The seller disclosure and trust account requirements for the sale of a proposed lot are currently set out in Part 3 of the LSA. However, there are additional disclosure frameworks for the sale of proposed lots contained in the BCCMA, the Building Units and Group Titles Act 1984 (Qld) and the South Bank Corporation Act 1989 (Qld).
The LSOLA will streamline these requirements by removing Part 3 from the LSA and replicating it in the BCCMA, the Building Units and Group Titles Act 1984 (Qld) and the South Bank Corporation Act 1989 (Qld).
Additionally, the LSOLA will amend the disclosure requirements in the BCCMA and the Building Units and Group Titles Act 1984 (Qld) to align as closely as possible with the disclosure framework provided for in the BCCMA.
With the welcomed commencement of the revised statutory regime relating to land sales both under the LSA and the Property Occupations Act 2014 (Qld) fast approaching, parties must ensure their contract documents and processes are in place to comply with the new requirements. Carter Newell is able to assist clients with this process to ensure the move to the new statutory regime is as streamlined as possible. In the meantime, it is important that parties continue to comply with the current requirements relating to the sale of land or lots in a Community Titles Scheme as set out in the current LSA and PAMDA.
