Property Law Act 2023 (Qld) – changes to seller disclosure obligations
Just shy of its Golden Jubilee, the Property Law Act 1974 (Qld) will soon be abdicating its powers to the Property Law Act 2023 (Qld) (Act). As we await the commencement date of its substantive provisions, we continue our investigation into its noteworthy changes.
One of the significant upcoming changes is the introduction of a pre contract seller disclosure regime, required for all freehold land in Queensland (subject to certain exemptions). We note that off the plan contracts for proposed freehold lots are not caught by the Act and will continue to be regulated by the Land Sales Act 1984 (Qld) and the Body Corporate Community Management Act 1997 (Qld).
This change will bring Queensland in line with other eastern states who already have established pre contract seller disclosure requirements, and shifts from the more seller friendly, ‘buyer beware’, contracting position Queensland has enjoyed to date.
Under this new regime, sellers must provide to buyers a completed and signed disclosure statement (Statement), and prescribed certificates (Certificates) before a buyer executes the contract for sale.
Disclosure Statement information
The draft Property Law Regulations 2023 (Regulations) propose that the Statement must include information about the property such as:
- the name of the seller, address and lot-on-plan description;
- unregistered encumbrances;
- impacts from proposals for transport infrastructure or notice/s of intention to resume;
- local government zoning details, Queensland or Commonwealth heritage details;
- whether the property is recorded on either the Contaminated or Environmental Management Register;
- contamination and environmental protections, orders or applications made under the Neighbourhood Disputes (Dividing Fences and Trees) Act 2011 (Qld); and
- rates and water information.
It is proposed that the Statement also contains other information for the buyer to consider prior to execution of the contract including:
- warnings that:
- the property may be subject to statutory easements;
- no warranty is given as to structural soundness of the improvements;
- rates and charges may be different to the amounts imposed on the seller; and
- highlighting information that is not included in the Statement, such as;
- flooding history;
- structural soundness; and
- current or past building or development approvals, or limits on developments by zoning.
As the Regulations are currently only available in draft, this information is subject to change.
Certificates to be annexed
The Regulations further propose that the Certificates annexed to the Statement include copies of:
- the title search and registered plan;
- notice/s issued under certain building and planning legislation;
- notice/s given to complete work or spend money on the property;
- documents relating to heritage registers, notice of intention to resume and transport infrastructure proposals;
- a pool compliance certificate; and
- material relating to the community titles scheme including a copy of the community management statement.
Exemptions from disclosure scheme
Certain categories of sale are exempted from the regime, including where the:
- buyer is a government, statutory body, listed corporation or a constructing authority;
- seller is a local government exercising power of sale to recover unpaid rates;
- seller and buyer are related; and
- sale price is more than $10 million (including GST).
Termination for failure to comply with requirements
If a seller fails to provide the completed and signed Statement and Certificates to the buyer when required, the buyer may terminate the contract at any time up to settlement.
A buyer may also have a termination right if the Statement and Certificates are provided but:
- they are inaccurate or incomplete on a material matter when given to the buyer; and
- when the buyer signs the contract, they are not aware of the correct state of affairs; and
- the buyer would not have signed the contract if it was aware of the correct state of affairs.
Anticipated impacts on the sale process
When the relevant sections of the Act commence, we expect to see the disclosure regime have a number of immediate impacts on the sale process in Queensland including:
- an increase in seller transaction costs to cover both the express outlays of obtaining the Certificates and the cost of preparing and compiling the Statement;
- possible timing delays:
- when entering into contracts given the lead time required to obtain the Certificates and prepare the Statement – this may impede the swift contracting environment currently enjoyed by sellers; and
- when evaluating the need for updated disclosure if there is delay in providing (once prepared) a Statement and Certificate to a buyer, or delay in execution of the contract by the buyer after receipt of the Statement and Certificate.
For further details about how the changes introduced under the Act will likely impact you and your organisation, please contact our Real Estate team.
This publication covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. It is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.