The Queensland Government is considering amending the Land Sales Act 1984 (Act) to provide better flexibility in the statutory sunset date regime for ‘off the plan’ sales.

Current law

Currently the Act provides a statutory right for an ‘off the plan’ unit purchaser to terminate the contract if title is not given to a purchaser by a sunset date of three and a half years from when the contract is entered into.

Developers can seek Ministerial approval to extend the statutory three and a half year sunset period for a particular development but only up to a maximum of five and a half years.

The application and extension process can be cumbersome and time consuming usually taking at least three months. Each extension application requires Ministerial approval and amendment of the Land Sales Regulation 2000 (Regulation) to list the particular development. Approval only becomes effective after Governor in Council approves the Regulation amendment which is then gazetted.

Such delays can result in uncertainty for developers particularly where the extension is required to secure project finance.

Even with extension approval larger integrated mixed use developments increasingly need more time to complete than the current maximum (extended) statutory period of five and a half years causing continued stress for the developer and potentially delaying or jeopardising some large development projects.

Proposal

In response the Queensland Government has issued a discussion paper indicating it is now considering amending the Act to:

• require an ‘off the plan’ contract to include a completion date upon which the title is to be passed
• provide a statutory right for a purchaser to terminate the contract if:
• for an expected completion date of less than three and a half years (after contract date), a registrable instrument is not supplied before the expiry of three and a half years (although the parties can agree to the purchaser’s termination right being exercisable by the purchaser prior to the three and a half year period), or
• for an agreed completion date more than three and a half years (after contract date), a registrable instrument is not supplied by the agreed completion date (effectively removing the current need for an application to extend the statutory sunset date).

Outcome

As a result the time when the termination right is activated would depend upon:

• whether the specified completion date is more or less than three and a half years after the contract is entered, and
• the date the parties agree that the purchaser’s right to terminate is activated if title is not given to the purchaser.

The new proposed sunset date would be:

• a date less than three and a half years if the parties so agree
• a statutory period of three and a half years, if the contract
• has an expected completion date of less than three and a half years, or
• is silent on a sunset date for the purchaser’s the right to terminate if title is not given to the purchaser by an agreed completion date (similar to the current provisions), or
• particularly for larger developments, a date more than three and a half years as agreed by the parties. In this instance purchasers would retain the right to terminate if title is not given to the purchaser by the agreed date (which may be in excess of five and a half years) but developers would no longer need to make application to the Minister for extension of time and amendment to the Regulation.

Submissions

The Government is currently calling for submissions on the proposed amendments to the Act prior to drafting amendments to the Act.

The proposed amendments in general ought to be encouraged as maintaining the balance between consumer protection and easing regulatory burden and associated cost. However, as with any legislation, it will be important that the amending legislation implements the intended changes simply, practically and with certainty for developers and purchasers alike. In particular implementation needs to be in line with current industry practices and without additional burdensome or complicated documentation processes as has been the case in some other real property based consumer protection legislation.

If you would like to discuss the proposed amendments with a member of our Projects and Property Group or alternatively discuss the preparation of a submission to Government we would be happy to assist.

The closing date for providing submissions to Government is 3 September 2009.

For further assistance or enquiries please contact:

Projects and Property

Ian Hazzard on 07 3233 8976
Andrew Muir on 07 3233 8836.