Recent amendments to Queensland property legislation will provide welcome support to property developers in commercial matters relating to off-the-plan sales.
The Land Sales and Other Legislation Amendment Bill 2014, introduced to parliament on 3 June 2014, amends the provisions of the Land Sales Act 1984 (Qld) (LSA), the Body Corporate and Community Management Act 1997 (Qld) (BCCMA) and the Property Law Act 1974 (Qld) (PLA) in relation to the sale of off-the-plan lots.
While it will be some months before these changes come into effect, property developers and buyers are encouraged to familiarise themselves with the amendments and the way that they will likely affect the buying/selling process.
Potentially the most welcome change will be the amendment to the provisions of the PLA, which will increase the maximum deposit for off-the-plan contracts to up to 20% of the purchase price prior to the instalment kicking into play. This will assist the risk borne by developers and financiers in cases where deposits are not adequate to cover losses where a purchaser fails to attend to settlement.
The Bill also proposes to alter the current structure for dealing with forfeited deposits in agents’ and lawyers’ trust accounts. This means that a stakeholder of the deposit will be able to provide to the parties a notice of intention to pay the deposit if the other party has not commenced proceedings with a certain period (at least 60 days).
These amendments are aimed at protecting property developers in instances where the buyer attempts to delay the release of deposits in effort to negotiate a part refund.
Disclosure Requirements and Contractual Requirements
The disclosure requirements for off-the-plan lots in community titles scheme (CTS) will be transferred from the LSA to the BCCMA after amendments come in to effect, while non-CTS off-the-plan lots will remain in the LSA. The main reason for this is to streamline and harmonise the provisions of these acts.
Other important changes relating to disclosure and contractual requirements include:
- For non-CTS off-the-plan lots the prohibition on the sale prior to obtaining operational works approval has been removed. This means that developers will be able to sell without these approvals in place;
- The disclosure requirements for the sale of proposed standard format lots in a CTS will be increased to match the disclosure obligations for the sale of units in a CTS;
- Disclosure requirements for the sale of non-CTS off-the-plan lots will be expanded to include depth of fill, compaction rates, and retaining wall specifications;
- The requirement to provide copies of approvals has been removed for the sale of non-CTS off-the-plan lots; and
- The offences in relation to inaccuracies in the disclosure statements have been removed from the legislation with only the buyer’s rights of termination remaining.
Variation and Termination Rights
The amendments also propose to simplify the requirements to make further disclosure where something on the plan identifying the lot changes.
Where there has been a change on the plan, developers will need to provide a further statement to buyers at least 21 days prior to settlement providing a plain English explanation of the general effect of the changes. However, where there are proposed changes to the actual lot these changes will still need to be endorsed by a surveyor where necessary.
Further, the BCCMA and LSA now proposes that the onus be placed on the buyer to show that the variation materially prejudices them. The buyer will be provided with a 21 day period to terminate from when they received the further statement.
Under the provisions of the BCCMA, the sunset date for settlements for off-the-plan lots in a CTS will be increased from three and a half years to five and a half years. However, where there is no sunset date specified in the contract the default period will be three and a half years.
These amendments are currently being reviewed by the Legal Affairs and Community Safety Committee and the amendments are expected to come into effect in a few months’ time.
How we can help
For comprehensive and well-rounded legal advice from a firm that stays informed and up-to-date, contact Streten Masons Lawyers. We specialise in commercial property matters for individuals and small to medium business. Make an enquiry today: http://smslaw.com.au/contact-us/
Craig Mason – Director