In the realm of “old pieces of legislation that need an update”, the Queensland Property Law Act was probably on most people’s lists (by which we mean… most lawyers’ lists).
So, it was fairly encouraging to see that the parliament actually agreed and decided to do something about it. The result? The aptly named… Property Law Act 2023.
Despite the name, the new PLA will come into force on 1 August 2025.
In this article we’re going to hit the high points of the new PLA. We’ll also dig into some topics in more detail in future articles.
So what are 5 key changes coming with the new property law regime in Queensland?
They are:
The introduction of statutory seller disclosure rules for property sales in Queensland;
Certain elements of easements that were not previously binding on future owners will become so;
The statutory limitation period to sue someone for breach of a deed is reduced from 12 years to 6;
Additional protections for lessees are being introduced; and
Significant changes to the rule against perpetuity for trusts over land.
Let’s discuss each in a bit more detail.
Seller Disclosure Scheme
Probably the most significant change in the new PLA is the introduction of a seller disclosure scheme.
Traditionally, Queensland has largely been a “buyer beware” State so far as disclosures in property sales go. That means that it was (with some exceptions) largely up to the buyer to make their own enquiries, do their own searches, and ensure they asked all the necessary questions before going ahead with a purchase.
While there were always certain disclosures required by sellers, these were scattered throughout various sources including common law, the contract itself, and pieces of legislation.
The new PLA combines these various requirements (and adds a few more) into a single statutory disclosure scheme that sellers will need to comply with as part of property transactions in Queensland.
While we’ll cover this in more detail later, basically a seller will be required to deliver a prescribed disclosure statement, certain certificates and information to the buyer before the buyer signs the contract for the purchase of the relevant lot.
A failure to make proper disclosure prior to the buyer entering into the Contract (in the sense of either missing information or incorrect information) will allow a buyer to terminate the contract at any point before settlement. Since a last-minute termination is probably most sellers’ worst nightmare, it’s important for all lawyers to get their heads around these disclosure obligations sooner rather than later.
Easements Now Binding on Future Owners
Under the current property law regime, certain types of covenants within an easement (known as a “positive covenant”) are not enforceable against future owners unless they specifically agree to be bound by them.
Under the new PLA, a covenant in a registered easement relating to the use, ownership or maintenance of the land is automatically binding on subsequent owners.
Interestingly this change is retrospective, meaning it will apply to all easements irrespective of when they were entered into.
Suing for Breach of a Deed
Many people aren’t aware of this, but one of the most significant differences between a deed and a contract is:
You need to sue someone for breach of contract within 6 years of the breach; but
You can sue someone for breach of a deed up to 12 years later.
As you can imagine, getting sued for something you did 11.5 years ago (some time after you can lawfully destroy all the relevant documents and records) is typically not very pleasing.
Thankfully, the new PLA reduces this immense 12 year period down to 6, bringing it in line with the limitation of actions for a contract.
Leasing Protections
There are a few changes being introduced about leases, so we’ll only touch on a couple here.
The first relates to liability when a lease is assigned to another party. Let’s say you have the following scenario:
Smith Co operates a business under a lease. Its obligations under the lease are guaranteed by John Smith;
Smith Co decides to move out, and assigns the lease to Jane Co;
After a time, Jane Co decides to move out too, and assigns the lease to Jones Co.
Currently, Smith Co and John Smith can be made responsible for any breaches or non-payments by both Jane Co and Jones Co. Basically, Smith is on the hook for the entire term of the lease, even when they had nothing to do with Jones Co at all.
The new PLA places a limit on Smith’s liability, so that while Smith can still be held liable for breaches by Jane Co, it is not on the hook for breaches by Jones Co.
The second big change relates to landlord consent for assignment or dealing with the premises. The new PLA introduces:
A one-month period within which the lessor must give a lessee notice of its response to a request for consent to do something (eg – assign the lease); and
A statutory right for a lessee to seek damages from the lessor if the lessor fails to give a decision or unreasonably withholds consent (including by imposing unreasonable, unnecessary or onerous conditions on its consent).
Trusts!
Admittedly this is not only one for lawyers but also accountants.
There is a long-standing principle known as the “rule against perpetuities”. Basically, it means that you can’t create a trust that lasts forever. Practically, it means that trust property must vest in the beneficiaries of that trust before 21 years after the death of a relevant person who was alive at the time the interest was created.
The new PLA abolishes this rule. Instead, it introduces a fixed maximum vesting period of 125 years from (effectively) the commencement of the trust.
In practice this is something to talk about with your structuring lawyer or accountant, to see if any existing trust structure you have might benefit from extending its vesting period (but you should be careful to get tax advice before making any moves like that).
A Brave New World
While much of it is fairly technical, the new PLA makes significant changes to the property law landscape in Queensland. Many of the changes provide greater certainty and protections for individuals and businesses in Queensland.
Sellers must ensure that they retain a Queensland property lawyer who is across the new seller disclosure regime, because if real estate agents remain involved in drafting a contract of sale (which is a legal document) we predict at least a few last-minute terminations are going to happen shortly after the requirements come into force.
If your agency needs a solution to tackle the new disclosure regime or any other elements of the new PLA, reach out to us today and we’ll make sure you off-risk and have more time to sell more property.
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