As part of the recent overhaul of the property sales legislation in Queensland, there have been significant changes to the requirements for selling land which is not in a body corporate ‘off-the-plan’. These reforms not only affect developers, but also affect anyone who might be subdividing their own property (perhaps 1 lot into 2 lots) for any reason or even those realigning a boundary with their neighbour to rectify an encroachment or as part of a purchase or sale of land.
Disclosure Obligations
Sellers have been required to provide buyers of lots“off-the-plan” a disclosure statement and disclosure plans for many years. The amendments to the Land Sales Act essentially rewrite the law relating to these matters. A summary of the law as it will apply when these provisions commence on 1 December 2014 is as follows:
- The requirement for settlement to occur within 18 months after the contract date remains.
- Sellers/Developers may now require a deposit of up to 20% of the purchase price without such a deposit being construed as a penalty or causing the contract to become an installment contract. Previously, a buyer could terminate the contract at any time before settlement if the deposit was more than 10% of the purchase price. That right has been removed.
- The nature and requirements for plans included in the disclosure documents have changed. For example, the plans must include certain lot particulars such as the number of the lot and area, bearings, distances and orientation. In addition,if there is an operational work approval for the lot, the plans must provide further details including details of contours, retaining walls and particulars about the fill. The plans must be prepared by a cadastral surveyor.
- The requirements for the disclosure statement have changed. They no longer need to detail contract particulars (such as names and addresses of the parties), but some of the statements to be included have changed. For example, now, statements must be made regarding the existence of development approvals and the statutory timeframes which apply under the Act for settlement and provision of updated disclosure documents.
- If there is any inaccuracy between an earlier disclosure plan and a new disclosure plan, the seller will need to notify the buyer in a written statement prepared by a cadastral surveyor explaining the differences in plain English. This must be given to the buyer at least 21 days before settlement.
- The buyer may terminate the Contract if it has not settled and the buyer would be materially prejudiced if compelled to complete the Contract given the extent of the inaccuracies in the disclosure statement. This differs from the previous legislation which used the words “significant variation” instead of “material prejudice”. The new wording is consistent with the approach under the Body Corporate and Community Management Act for lots in a Community Titles Scheme.
- The buyer must give their notice to terminate within 21 days after the seller gives them the further statement, unless the parties have agreed to a longer period.
- The buyer also has a right to terminate the contract if the seller has not complied with their further disclosure obligations and the buyer would be materially prejudiced if compelled to complete the contract.
- The seller is still required to give the buyer the registered plan and a statement by a cadastral surveyor confirming there are no
changes between the registered plan and the information in the disclosure plans.
Exemptions
There are a couple of exemptionsto the disclosure obligations:
1. Small Subdivisions
Previously, if you were selling any property “off-the-plan”, even if the plan was only creating 2-5 lots, you still needed to either comply with the disclosure obligations in the Land Sales Act, or apply for an exemption from them. The amendments to the Act now allow a statutory exemption for subdivisions of not more than five (5) lots without the need to apply formally to the government for the exemption.
2. Large Transactions
The Act does not apply to the sale of six (6) or more proposed lots if the sellers and buyers of all the lots are the same and the sale is the subject of a single contract or two (2) or more contracts entered into within 24 hours. This exemption did exist under the previous legislation.
Options to Purchase
Buyers and sellers entering into options to purchase properties offthe-plan will need to comply with the disclosure obligations under the Land Sales Act in the same way as they would if they were entering into a contract. However, if a contract is later entered into arising from the option, the seller will not disclosure documents to the buyer again, provided that the buyer under the contract is a party to the
option agreement.
Application
The amendments apply only to Contracts entered into after 1 December 2014.
Final Word
In this article, we have set out a summary of the provisions of the new legislation. It does not comprise a comprehensive list of the requirements to be met for off the-plan sales of standard format and volumetric format lots (not in a body corporate). If you would like to know more about the changes or how they may affect your own circumstances, please do not hesitate to contact one of our solicitors.
