The Queensland Government has taken another step in its commitment to red tape reduction, with the granting of assent to the Land Sales and Other Legislation Amendment Act 2014 (Qld) (Amending Act) on 26 September 2014.
The Amending Act makes significant changes to the Land Sales Act 1984 (Qld) (LSA), particularly in relation to the sale of lots "off-the-plan", maximum deposits and sunset dates. It also relocates the provisions regarding strata title sales to the Body Corporate and Community Management Act 1997 (Qld) (BCCMA).
These amendments complement the changes brought about by the passing of the Property Occupations Act (Qld) 2014 (POA), which will repeal the Property Agents and Motor Dealers Act 2000 (Qld) (PAMDA).
CHANGES TO THE SALE OF PROPOSED CTS LOTS
Moved to the BCCMA
To reduce duplication and streamline the community title scheme (CTS) provisions, Part 3 of the LSA will be relocated to the BCCMA (and, in part, the Building Units and Group Titles Act 1984 (Qld) and South Bank Corporation Act 1989 (Qld)).
This will mean that developers of proposed lots in CTSs will be able to largely refer to the BCCMA.
Extension to sunset date for settlement
Section 28 of the LSA currently requires a seller to provide a buyer with a registrable transfer within 3 ˝ years of a buyer entering the contract - although a seller can apply for a regulation to be made extending this period up to 5 ˝ years.
The Amending Act will allow a contract to set a sunset date of up to 5 ˝ years. If the contract is silent, the sunset date is 3 ˝ years. In either case, the date will be extended if the buyer requests a later settlement date and the seller agrees.
CHANGES TO THE SALE OF NON-CTS LOTS
Removal of restriction on sales prior to development approval
Currently, proposed non-CTS lots may only be sold if development or compliance permits exist for reconfiguration of the land or operational works. The Amending Act removes this requirement.
For developers, this opens up the possibility of proposed non-CTS lots being sold at an earlier point in time. Earlier pre-sales may contribute to securing finance and enhancing the viability of projects.
Automatic exemption for subdivisions of 5 or less lots
The Amending Act will put in place an automatic exemption from Part 2 of the LSA (which prescribes seller disclosure and trust account requirements) for land that is to be subdivided into 5 or less non-CTS lots. It also extends the exemption to amalgamations.
Practically, this will remove the application process and lessen the burden of regulatory compliance for these minor subdivisions and amalgamations.
CHANGES TO DISCLOSURE OBLIGATIONS
The amendments in relation to disclosure material differ for non-CTS and CTS proposed lots. In both cases sellers will be required to provide buyers with disclosure statements and plans before they enter into a contract.
Non-CTS proposed lots
Under the LSA, disclosure plans for lots that are not part of a CTS must now include certain particulars, including new requirements in relation to compaction rates, fill depth and retaining walls. Sellers will also no longer need to give copies of approvals to buyers and may provide statements that are "substantially complete".
CTS proposed lots
Under the BCCMA, sellers will be required to provide buyers of CTS proposed lots with a disclosure statement and plan. There are also new requirements for disclosure plans. Additional detail is required for standard format lots, including regarding contour levels, the height and depth of retaining walls and further disclosure about any proposed building.
CHANGES TO DISCLOSURE PLANS
Non-CTS proposed lots
The Amending Act introduces new provisions in the LSA to allow sellers to amend disclosure plans by providing notice up to 21 days before settlement. The notice must be prepared by a cadastral surveyor and explain the changes "in plain English". Any buyer which is "materially prejudiced" will be given the right to terminate by written notice to the seller within 21 days.
CTS proposed lots
As for non-CTS lots, sellers of CTS lots will be able to give notice to buyers about changes in disclosure material up to 21 days before settlement. Buyers will also be able to terminate within 21 days if "materially prejudiced".
OTHER CHANGES FOR NON-CTS PROPOSED LOTS
No duplication of names and addresses
The full names and addresses of buyers and sellers will no longer be required in disclosure statements under the LSA. This prevents the unnecessary duplication of this information, which is already in contracts.
No plan of reconfiguration of land
A plan for reconfiguration of land will no longer be required. This will allow greater efficiency for developers in pre-sales, especially given that they will also no longer need development approval prior to selling a lot.
No further disclosure to buyers under an option
A seller will not be required to provide a buyer with disclosure material if the option (which may be a call or put option) is exercised and the grantee under the option is the same as the buyer, ie. the grantee did not nominate a different person as buyer.
Increase in maximum deposit to 20%
If a deposit is greater than 10% of the purchase price, the LSA currently permits a buyer to terminate. The contract will also be an instalment contract under the Property Law Act 1974 (Qld) (PLA).
The Amending Act removes this right of termination. It also amends the PLA so that the instalment contract provisions for a proposed lot are not triggered unless the deposit is greater than 20%.
Stakeholder can release deposits
The Amending Act does not alter the current requirement that deposits must be held in the trust account of a solicitor or real estate agent. It does, however, allow for the stakeholder to release the deposit where the parties are in dispute. The stakeholder must first give notice of its intention to pay the deposit to the buyer/seller if the seller/buyer does not commence legal action by a stated date (at least 60 days).
The Amending Act also alters the LSA and BCCMA to put it beyond doubt that bank guarantees can be given as security for deposit payments. In such cases, the stakeholder must keep the instrument until required to return it to the buyer at law or when it is called upon in accordance with the contract. The stakeholder must deal with the guarantee in the same way as trust money, and pay proceeds it receives in calling on the guarantee into a trust account.
The Amending Act provides a number of significant changes to the regime in relation to land sales in Queensland. Those changes will commence at the same time as the POA, which is expected to be in November this year.
It is important for developers to review and update their contract documentation and standard procedures in order to ensure they benefit from these changes once the Amending Act commences.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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