The Queensland Government is moving closer to the introduction of a seller disclosure regime for the sale of land in Queensland. The new laws, once passed, will result in a change in direction from a 'buyer beware’ approach to a proactive seller disclosure approach, which is in place in some other states.
Partner Don Battams discusses.
1. New statutory seller disclosure requirements
The Queensland Government is moving closer to the introduction of a seller disclosure regime for the sale of land in Queensland. The new laws, once passed, will result in a change in direction from a 'buyer beware’ approach to a proactive seller disclosure approach, which is in place in some other states.
The Property Law Bill 2023 (Qld) was introduced into the Queensland Parliament on 23 February 2023 to replace the Property Law Act1974 (Qld). A public consultation process followed and a report from the Legal Affairs and Safety Committee was tabled to Parliament on 14 April 2023.
The Property Law Bill 2023 (Qld) will not become law in Queensland until the bill is further progressed through Parliament (and amendments may be made). The commencement date of the Act is not yet known.
Once enacted and commenced, it will introduce a suite of new disclosure requirements for sales of registered (established) land in Queensland.
These new requirements will apply to sellers of not only residential property but also agricultural, commercial, industrial and other freehold property. They apply to the sale of all registered freehold property including sales by auction, sales by a mortgagee or receiver, and sales arising from the exercise of an option, although there are some exceptions (referred to below).
Before a contract of sale for a property is signed by the buyer, the seller will be required to give the following disclosure documents to the buyer (either physically or electronically):
- a ‘disclosure statement’ in the approved form for the property, disclosing information prescribed by regulation; and
- each document prescribed by regulation (each a ‘prescribed certificate’) applicable to the property.
The approved form requires certain warnings and other statements to be included as part of the disclosure statement (as set out in the regulation).
The relevant regulation is the proposed Property Law Regulation 2023 (Qld).
The disclosure statement must be completed with information that is true at the time the statement is given to the buyer and be signed by the seller or an authorised agent.
2. Disclosure statement
Sellers will be required to disclose the following information (among other things) in a disclosure statement:
- the details of each unregistered encumbrance affecting the property;
- the zoning of the property under the local government’s planning scheme;
- information relating to contamination and environmental protection in respect of the property under the Environmental Protection Act 1994 (Qld) (including, among other things, whether the property is recorded on the environmental management register or the contaminated land register and whether the seller is required to give a notice under section 408 of that Act);
- whether the property is affected by an application or order in relation to a tree under the Neighbourhood Disputes (Dividing Fences and Trees) Act 2011 (Qld);
- whether the property is affected by a transport infrastructure proposal that will alter the dimensions of the property;
- whether the property is heritage listed;
- whether a government body has notified an intention to resume the property or part of it;
- whether there is a pool on the property (or common property);
- whether there is a commercial office building of more than 1,000m2 on the property; and
- information relating to the amount of rates and water charges payable for the property.
The disclosure statement does not require disclosure of the following – flooding information, structural defects or pest infestation, current or historical use, details of past or current building approvals for the property, planning law limits on the use of the property and services connected or not connected to the property.
A link to the draft disclosure statement can be found here (note that the draft statement was made available for public comment in June 2022 and is subject to change).
From the draft disclosure statement, you will see that the disclosure statement will contain certain statutory warranties given by the seller.
3. Prescribed documents
Under the proposed Property Law Regulation 2023 (Qld), the prescribed documents are copies of the following:
- a title search showing registered interests for the property;
- the registered plan of survey for the property;
- notices in relation to certain matters under the Queensland Building and Construction Commission Act 1991(Qld) (unlicensed building work), the Building Act 1975 (Qld) (show cause and enforcement notices) and the Planning Act 2016 (Qld) (show cause and enforcement notices) (if applicable);
- any document given to the seller in relation to information mentioned in paragraphs 2(e),(f) and (g) above;
- for any pool, a pool compliance certificate or a notice of no pool safety certificate;
- the community management statement for the scheme (CMS) (if applicable);
- a body corporate certificate (containing information about the body corporate and the scheme) or, if one cannot be provided, the reasons why the seller has not been able to obtain the certificate (if applicable); and
- for schemes established under the Building Units and Group Titles Act 1980 (Qld), copies of by-laws and exclusive use allocations that are still in effect but not included in the CMS (if applicable).
Links to the draft body corporate certificates can be found here for the sale of a lot included in a community titles scheme and for the sale of a lot regulated under the Building Units and Group Titles Act 1980 (note that the draft certificates were made available for public comment in June 2022 and are subject to change).
4. Failure to comply with the new disclosure requirements
The buyer may terminate the contract of sale any time before settlement by written notice to the seller if:
- the seller has not given the buyer a disclosure statement or any applicable prescribed certificate before the contract was signed by the buyer; or
- the disclosure statement or any applicable prescribed certificate was given to the buyer and all of the following apply:
(1) it is inaccurate or incomplete in relation to a material matter affecting the property at the time it was given to the buyer;
(2) at the time the contract is signed by the buyer, the buyer is not aware of the correct state of affairs concerning the matter; and
(3) if the buyer had been aware of the correct state of affairs concerning the matter, the buyer would not have signed the contract.
A ‘material matter’ does not include a matter prescribed by regulation not to be a material matter. Currently, under the proposed Property Law Regulation 2023 (Qld) each matter in paragraphs 2(h) and (i) above are not a material matter.
Any amount paid by the buyer for the property under the contract (including the deposit) must be repaid by the seller together with any interest earned on the investment of that amount within 14 days after any termination.
5. Exceptions to the new disclosure requirements
A buyer may waive its right to receive the disclosure documents by written notice prior to the buyer signing the contract, but only in circumstances where:
- the seller and buyer under the relevant contract are ‘related’ (e.g., a family relative or a related body corporate); or
- the contract price for the property is more than $10 million including GST (or an amount to be prescribed under regulation).
A seller need not comply with its disclosure obligations if the buyer under the contract is the Commonwealth, any state, any local government, any statutory body, any listed corporation or any subsidiary of any listed corporation.
There are other circumstances under which the new disclosure requirements do not apply (e.g., sale of interest to co-owner, boundary adjustment between adjoining owners, contract gives effect to a court order, enforcement warrant, financial agreement under the Family Law Act 1975 (Cth) or transmission to a personal representative because of the death of an owner).
As the disclosure obligations only apply in relation to freehold properties, sellers under contracts in respect of leases (e.g., state leasehold land and ‘company title’ arrangements) would not be subject to the disclosure requirements.
Application to option agreements
The disclosure obligations are applicable to options (call options, put options and put and call options).
However, if:
- the grantee of the call option (or the grantor of the put option) is the same person as the buyer under the resulting contract of sale; and
- the seller has already complied with its disclosure obligations prior to the buyer signing the option agreement,
then the seller is not required to comply with its disclosure obligations again when the contract is entered into pursuant to the exercise of that option.
This means that if the call option is exercised in favour of a nominee (who will become the buyer of the property), then the seller as grantor must comply with the disclosure requirements again in relation to that resultant contract, even if the grantee under the option agreement has already received the disclosure documents.
If you require any assistance navigating the proposed disclosure requirements or other assistance with a property transaction, please contact HopgoodGanim's Property team.