By Partners, Edwina Reynolds, Tony Butler, and Heath Gleig-Scott
The Property Law Act 2023 (new PLA) was passed by Parliament on 25 October 2023 and received royal asset on 2 November 2023, with a commencement date to be announced soon. The new PLA will replace the nearly 50-year-old Property Law Act 1974 (Qld) (old PLA), which has not been comprehensively reformed since its introduction.
The main changes are:
- seller disclosure requirements under sale contracts;
- time of the essence in contracts;
- deed limitation periods;
- guarantees and indemnities contained in deeds;
- subsequent owners enforcing covenants in easements; and
- the common law position with respect to leases.
Contracts for the sale of land
The principles governing the sale of the land remains generally unchanged. While there are a number of changes proposed in relation to electronic settlements and the right to claim on the seller’s insurance, the most significant changes are set out below.
The most significant change that will occur with the new PLA is the introduction of a new statutory seller disclosure scheme, aligning Queensland with the disclosure requirements for other states. Queensland previously did not have formal disclosure requirements, other than for “off the plan” or community titles scheme. The new disclosure scheme serves to make the process more transparent for buyers and less complex for sellers by combining the common law, statutory, and contractual seller disclosure obligations into one single scheme. This scheme applies to all sales of freehold land, including sale by way of auction (subject to exemptions).
Under this scheme certain disclosure documents are to be provided by the seller to the buyer, either electronically or physically, prior to the signing of the contract. This statutory requirement includes information about:
- the property title;
- planning and zoning;
- building work;
- infrastructure proposals;
- rates and water accounts;
- body corporate information;
- energy efficiency; and
- environmental issues.
The disclosure statement will need to be in the approved form.
A buyer will have the right to terminate due to a failure of the seller to provide the required documents, inaccuracies, or material prejudices contained in the documents.
Time not of the essence for Adverse Events
Currently, time is typically of the essence in contracts of sale for Queensland. The new Act will introduce provisions that make time not of the essence in situations of ‘Adverse Events’, which include:
- Cyclone, fire, flood, landslide, seismic event, storm, storm tide, tsunami or tornado
- Public health emergencies under the Public Health Act 2005
- Requirements to comply with a lawful direction or order given by a government entity under a law of the Commonwealth or a State
- An act of terrorism, activity related to war, civil commotion, public disturbance, or riot; and
- An explosion or sudden impact of an object, for example, an aircraft or object from space
Time will continue to be of the essence once notice is provided by the party who could not attend settlement due to the Adverse Event.
Limitation period of deeds
The limitation period for bringing an action under a deed will be reduced from 12 years to 6 years (which brings it in line with the limitation period for contracts). Queensland will now have the shortest limitation period for commencing proceedings after a cause of action arises, with other states limitation periods ranging from 12-15 years. This change will not affect existing deeds.
Guarantees and Indemnities
A guarantee or indemnity under a deed will be required to be in writing and signed by the guarantor/indemnifier pursuant to section 69 of the new PLA. Subject to any restrictions in the National Consumer Credit Protection Act 2009, a guarantor/indemnifier may sign electronically.
The ability of subsequent owners to enforce positive covenants in easements has been of much debate in case law. There has been difficulty in enforcing positive covenants which did not run with the land. Section 65 of the new PLA addresses this issue. It states that where a covenant in a registered easement imposes an obligation (positive or negative), in relation to the use, ownership or maintenance of the burdened land for the benefit of the other land, the covenant will be binding on subsequent owners of the burdened land unless those covenants are expressed to be personal to the original parties. This section will operate retrospectively, and it cannot be contracted out of except if the easement expressly stated that the covenant is personal to the grantor and grantee named in the easement.
The new PLA makes several changes to the common law position regarding leasing. These changes will impact:
- the liability of a transferor with respect to lease covenants after transfer and leaseback;
- the enforceability of lease covenants against an assignee;
- the liability of the original assignor and any guarantor upon further assignment of lease; and
- lessor consent requirements.