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On 25 October 2023, the Queensland property law landscape underwent significant and historical transformations following the Queensland Government passing substantial changes to the Property Law Act.

Since its introduction in 1974, the Property Law Act has remained mostly unchanged.  However, the recent amendments are a result of 232 recommendations from Queensland commercial and property researchers to the Queensland Government. The amendments aim to simplify and modernise Queensland’s property laws by removing outdated provisions and providing greater certainty, bringing Queensland more in line with other Australian states and territories.

While the commencement date for the amended legislation is yet to be determined, some provisions will apply retrospectively. Therefore, it’s important to be across the amendments and what they mean for property transactions and leases.

SELLER’S DISCLOSURE REQUIREMENTS

There are currently limited requirements on sellers to disclose information to a purchaser as part of the sale of freehold land in Queensland.  However, that is about to change. 

The amendments to the Act mean that seller disclosure will be mandatory resulting in an extensive disclosure process being completed prior to the execution of a contract for the sale and purchase of freehold property.  

Although there are some exemptions (including where the transaction involves related parties and a waiver notice is given by the buyer before signing the contract, contracts giving effect to a court order or family law financial agreement, or contracts giving effect to a transfer of property from a deceased estate to a legal personal representative or beneficiary), if you are selling freehold property that is not exempt, you will be required to provide a disclosure statement and prescribed certificates to the buyer before the contract is signed. That cannot be avoided. 

The disclosure requirement empowers buyers to make informed decisions prior to entering into a contract for the purchase of freehold property.   Importantly, a failure to comply with the disclosure requirements will entitle the buyer to terminate the contract anytime up until settlement, which poses a significant risk to sellers.

Our hot tip?  Sellers should engage a solicitor prior to entering into a contract for the sale of freehold property.  This is necessary to ensure the contract is prepared correctly and you do not face a risk of the buyer terminating prior to settlement due to non-compliance with the new legislative requirements.

Further, any real estate agents who prepare contracts will need to be across the amendments to the legislation to ensure the seller’s disclosure obligations are satisfied.

CONVEYANCING

In February 2023, e-conveyancing was mandated for specific Queensland property transactions. The Act now recognises and facilitates this mandate.

The amendments to the Act provide certainty to buyers and sellers on how settlement is to be completed if there is a delay due to uncontrollable factors such as severe weather, public emergencies or e-conveyancing system failure. Other amendments clarify buyer rights and seller obligations if a residential dwelling is destroyed or damaged while under contract and is unfit for occupation, or the seller’s title is defective and the seller cannot complete the contract.

Our hot tip?  Parties to a Queensland conveyancing transaction should engage a solicitor prior to entering a contract. This is crucial to ensure the e-conveyancing mandate can be complied with and of course, to ensure interests are protected.

ASSIGNMENT OF LEASES

Ordinarily, business owners selling their business with an existing lease need to obtain lessor’s consent to the assignment of the existing lease to the purchaser. This process is somewhat outside of the control of the seller and buyer and can take considerable time which often results in delays to settlement. 

The amendments to the Act have the effect of providing a one-month timeframe for lessors to determine whether to consent to an assignment of the existing (non-retail) lease.  Failure to comply with this provision will allow the lessee to apply to the court for remedy and/or damages, and the court is granted broad scope to make its decision.  It is noted that this amendment brings the status of consent to assignment of leases (other than retail leases) in line with the provisions of the Retail Shop Leases Act.

Further, the current position with respect to the assignment of a non-retail lease is that if a lessee and guarantor assign a lease and the new lessee (ie. the buyer of the business) breaches the lease, the original lessee can be held responsible for the breach.  Under the new legislation, if the new lessee subsequently assigns the lease and the subsequent lessee breaches the lease, the original lessee and guarantor will be released from responsibility, regardless of any agreement to the contrary.  Whilst this provides some protection to the original lessee of the business, it is noted that some risk remains insofar as the initial assignment of lease affects the original tenant of the premises.

Our hot tip? Parties to a business transaction should engage a solicitor prior to entering into a business sale contract to ensure they understand their rights and obligations associated with an assignment of lease.  Landlords should engage a solicitor as soon as possible after receiving a request for consent to an assignment of lease so that they can obtain advice in relation to the process including their obligations regarding the new timeframe requirements and the risks associated with non-compliance.

SALE OF A PROPERTY SUBJECT TO A LEASE

Under the existing legislation, there are specific provisions about what lease obligations are enforceable on a seller and the new owner of a property once it is sold.  Following the recent amendments to the Act, the new owner of a leased property is required to take on and observe all the rights and obligations of the lease, unless there are express provisions to the contrary. 

Our hot tip?  If you are buying a property subject to a lease, check the existing lease agreement carefully before signing a contract in case changes are required or the lease is not aligned with your goals and objectives of the property.

EASEMENTS

At common law, the use and/or maintenance of a benefitting easement (also known as a positive covenant where one property owner has specific rights to use or obligations to maintain part of another property owners land) requires consent from the proposed purchaser of a property. This means that where a benefiting easement existed on a property being sold, the easement could not be enforced on the new owner without their prior agreement. The existing legislation is unclear on how the issue of consent was determined.  The new legislation provides that the use, ownership, or maintenance of all registered benefitting or burdening easements (ie. where one property owner is restricted from using part of their land) is legally binding on future property owners, unless it is expressed to be personal or unique to specific parties.  Importantly, this amendment applies to easements registered prior to the commencement of the new legislation.

Our hot tip? If you are buying property subject to an easement, seek advice from a solicitor to understand the impact of the easement on your rights as owner as well as the rights of any subsequent owners of the property if you decide to sell.

Considering the retrospective nature of this provision, if you’re in the process of buying a property, discuss any easements with a solicitor before the contract is signed or at the very least, before it becomes unconditional.

Overall, the amendments to the Property Law Act are both necessary and positive for Queensland property law. As the changes come into effect, staying informed and seeking professional legal advice will be crucial for those affected by the legislation which includes sellers of freehold land, and landlords and tenants of non-retail property.

 

 

Co-authored by Michelle Neil, Lawyer and Sarah Stoddart, Director of Vitality Law Australia, an award winning commercial law firm servicing pharmacy businesses and healthcare professionals across Australia.  For further information, email hello@vitalitylawaustalia.com or visit www.vitalitylawaustralia.com

This article is intended to be for general information only. It does not constitute legal advice nor does it establish a relationship of client and lawyer. Specific circumstances or changes in law may vary the accuracy or applicability of the information published. We recommend seeking specific legal advice particular to your circumstances before taking any action, or refraining from taking any action, on any issue dealt with in this article.