The Property Law Bill 2023 (Bill), which is intended to replace the Property Law Act 1974 (Qld), will bring about considerable change to the sale of freehold land in Queensland with the implementation of a new seller disclosure scheme.
The objective of the seller disclosure scheme is designed to bring transparency and consistency to property sales by making it mandatory for a seller of freehold land to disclose relevant information to a buyer, which is more in line with the disclosure obligations of other States. Sellers will be required to disclose specific information to potential buyers relating to the condition and status of the property.
The Bill is currently awaiting the second reading debate in Parliament, which will be sitting next on 22 August 2023.
What are the disclosure requirements?
The disclosure scheme will apply to the sale of freehold land, including auctions, mortgagee or receiver sales and sales resulting from the exercise of an option (subject to the various exceptions, as referenced below).
Before a buyer signs a contract of sale, the seller must provide a signed disclosure statement containing prescribed information, which must be in the approved form and completed with accurate information. A draft of the approved form of disclosure statement is here.
The disclosure statement requires the provision of both documents (referred to as prescribed certificates) and information prescribed by the Property Law Regulation 2023 in relation to the lot.
The prescribed certificates that must be provided to a buyer include:
- title search
- registered plan of survey
- notice of any unlicensed building work undertaken within the last 6 years
- current show cause notice or enforcement notice issued by the relevant authority under the Building Act 1975 or Planning Act 2016
- current notice or order issued by an authority requiring work to be done or money spent
- current notice, order or transport infrastructure proposal issued by an authority that may affect the title or use of the lot (eg notice of intention to resume)
- if there is a pool for the lot, pool compliance certificate or notice that there is no pool safety certificate
- if the lot is within a community titles scheme:
- body corporate certificate (or a statement that the body corporate certificate is not attached and reasons why the seller has been unable to obtain the certificate)
- community management statement
- exclusive use by-laws or other by-laws not included in the community management statement
- if the lot is included in a plan under the Building Units and Group Titles Act 1980, body corporate certificate (or a statement that the body corporate certificate is not attached and reasons why the seller has been unable to obtain the certificate)
The information prescribed by the Property Law Regulation 2023 that must be provided to a buyer include:
|details of any unregistered encumbrance which will not be released at settlement, including:
(a) unregistered lease, including a short lease under the Land Title Act 1994
(b) access agreement, opt-out agreement or conduct and compensation agreement under the Mineral and Energy Resources (Common Provisions) Act 2014
(c) unregistered charge, mortgage, easement or profit a prendre
(d) charge, restriction or burden affecting the title in favour of the Commonwealth, State or local government
but excludes an encumbrance registered on title
|zoning of the lot as published in the local government planning scheme
|(a) whether the lot is recorded on the environmental management register or contaminated land register
(b) whether the seller is required to give the buyer a notice under section 408 of the Environmental Protection Act 1994 (Qld)
(c) whether the lot is subject to an environmental protection order
(d) whether the lot is subject to a transitional environmental program
|Community Titles Scheme
|whether the lot is included in a community titles scheme or subject to a plan under the Building Units and Group Titles Act 1980
|whether the lot is affected by any tree orders or applications under the Neighbourhood Disputes (Dividing Fences and Trees) Act 2001
|Notice or orders
|whether the lot is affected by a notice, order or transport infrastructure proposal
|whether there is a pool for the lot
|Commercial office building
|if there is a commercial office building of more than 1,000m2 on the lot, that a Building Energy Efficiency Certificate is available on the Building Energy Efficiency Register
|Rates and Water
|details of the most recent rates and water service charges for the lot (if rates and water service charges are payable)
The scheme also prominently alerts a buyer to undertake its own due diligence about matters not covered by the disclosure statement before signing a contract of sale. In particular, the disclosure statement does not require the disclosure of information relating to:
- flood history
- structural soundness of the building
- pest issues
- current or historical use of the property
- current or past building or development approvals
- limits imposed by planning laws on the use of the land and services that are or may be connected to the property.
For auctions, the seller disclosure scheme makes a distinction between buyers of a lot that register as a bidder either before or after the commencement of an auction. Where a buyer registers as a bidder after commencement of the auction (and has not previously been provided with the disclosure statement and prescribed certificates), the disclosure documents must be made available physically (for an auction conducted in person) or electronically (for an auction conducted electronically).
The seller disclosure scheme applies to sales arising from the exercise of an option. In these circumstances, the seller will be required to give the relevant disclosure statement and prescribed certificates to:
- the buyer under the option, prior to the buyer signing the option; and
- the buyer under the contract of sale arising from the exercise of the option, prior to the buyer signing the option (in circumstances where the buyer under the option and the contract of sale are different).
A seller will need to ensure that the mechanics of its option are drafted such that the seller will have the ability to provide any disclosure statement and prescribed certificates to a third party nominated as buyer under a contract of sale prior to the nominee executing the contract of sale.
The disclosure statement and prescribed certificates may be given physically or electronically (and also signed electronically), allowing for easier access and convenience. This will facilitate the use of electronic delivery of the disclosure documents using platforms such as DocuSign and cloud storage or as a secure link in an email.
When sending a secure link via email containing these disclosure documents, the seller should request a delivery receipt notification confirming that the email has been successfully delivered to the buyer’s nominated email address.
Exceptions to disclosure requirement
There are various exceptions to the requirement for a seller to provide a disclosure statement, including for example:
- contract giving effect to the resumption of land under the Acquisition of Land Act 1967
- transactions involving a boundary realignment between adjoining owners
- sale between related parties in circumstances where the buyer gives the seller a notice waiving compliance with the disclosure requirement
- transactions involving a government entity as the buyer of the lot
- the contract is more than the amount prescribed by regulation (or, if no amount is prescribed, $10 million including GST) in circumstances where the buyer gives the seller a notice waiving compliance with the disclosure requirement.
However, such exceptions do not exempt the seller from providing the required disclosure under another Act, e.g. notice under section 408 of the Environmental Protection Act 1994 (Qld).
Buyer’s right to terminate
A buyer has a right to terminate a contract, on giving a notice of termination to the seller, prior to settlement if:
- the seller fails to provide the disclosure statement and any prescribed certificates before the buyer signed the contract.
This is an absolute right to terminate the contract and does not require the buyer to prove that the non‑disclosure related to a material matter.
- all of the following apply:
- the disclosure statement or prescribed certificates contain an inaccuracy or are incomplete in relation to a material matter
- the buyer was unaware of the correct state of affairs concerning the matter when they entered into the contract
- the buyer would not have entered into the contract had they been aware of the correct state of affairs.
The only exception to a buyer’s right to terminate is where the seller’s failure to disclose (or inaccuracy in the disclosure) is also a failure to comply with another Act. In this circumstance, the consequence provided for in the other Act will apply instead.
For example, a failure by a seller to give a buyer notice about unlicensed building work under the Queensland Building and Construction Commission Act 1991 does not give a buyer the right to terminate the contract, but instead implies a contractual warranty that the building work was properly carried out.
Where a buyer terminates a contract of sale, the seller must refund any amount paid by the buyer towards the purchase of the land within 14 days of termination. This includes any interest accrued on the amount whilst held by the seller).
Once the relevant provisions of the Bill commence, sellers will need to be mindful of their obligations relating to the seller disclosure scheme.
For more information, please contact Sarah Roettgers