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Property & Projects

Upcoming mandatory disclosure regime in Queensland land contracts

By 24 October, 2024No Comments

From 1 August 2025, a seller of land in Queensland must comply with the pre-contract disclosure regime, unless an exemption applies.

This is a significant change arising out of the Property Law Act 2023 (Qld) (Act) which received royal assent on 2 November 2023 but was only proclaimed to commence on 1 August 2025, and the Property Law Regulation 2024 (Qld) (Regulation) which will also commence on 1 August 2025.

Application

The regime applies to land transactions which may be take place in the form of:

  1. a standard contract for sale of land;
  2. a call option agreement;
  3. a put option agreement;
  4. a put and call option agreement; and
  5. any other agreement or promise to sell land.

For the purpose of this article, any of the above is generally referred to as ‘contract’.

Mandatory disclosure documents

Pursuant to Part 4, Division 4 of the Act, the following must be given to a buyer before a contract is signed by the buyer:

  1. completed disclosure statement signed by the buyer; and
  2. prescribed certificates.

Disclosure Statement

The key requirements of the disclosure statement are set out in sections 99(1)(a), 99(2) and 99(3) of the Act and regs 8 to 10 of the Regulation.

Information that must be disclosed in the statement include, for example:

  1. details of each unregistered encumbrance on the lot;
  2. zoning and heritage information on the lot;
  3. whether the property is recorded on the environmental management register and contaminated land register under the Environmental Protection Act 1994 (Qld);
  4. tree disputes applications and orders;
  5. whether the lot is affected by a transport infrastructure proposal to locate the infrastructure on the lot or alter the dimensions of the lot;
  6. whether the lot or part of it is affected by a notice of intention of resumption; and
  7. most recent water and rates charges.

The disclosure statement must be completed with information that is true at the time the statement is given to the buyer.

Prescribed certificates

The key prescribed certificates are listed in sections 99(1)(b) and 99(4) of the Act and regs 5 to 7 of the Regulation.

The prescribed certificates include, for example:

  1. the title search and registered plan of survey of the lot;
  2. copy of notice(s) issued or must be given to the buyer under the Queensland Building and Construction Commission Act 1991 (Qld), the Building Act 1975 (Qld), the Planning Act 2016 (Qld) and the Environmental Protection Act 1994 (Qld);
  3. notice(s) or order(s) given to complete work or spend money on the lot that remains effective immediately before the contract is signed by the buyer;
  4. copy of any document relating to heritage registers, notice of intention of resumption and transport infrastructure proposals;
  5. a pool compliance certificate; and
  6. material relating to the community titles scheme including a copy of the body corporate certificate and the most recent community management statement.

Exemptions to the regime

A seller is exempted from complying with the disclosure regime in some circumstances pursuant to section 100 of the Act. Some examples include:

  1. where the contract sale price is more than $10 million including GST (unless another amount is later prescribed by the Regulation) and the buyer waives the requirement by notice to the seller;
  2. where the contract arises from the exercise of an option for sale which includes the disclosure documents and the buyer is the same as the option grantee;
  3. where the buyer is a government, statutory body, listed corporation or a constructing authority;
  4. where the seller and buyer are related;
  5. where the contract gives effect to a court order; and
  6. where the seller and buyer are owners of adjoining land and the contract provides for the adjustment of a common boundary.

Significant consequences for non-compliance

Right to terminate

A buyer will be entitled to terminate the contract pursuant to section 104 of the Act if the seller has:

  1. failed to provide the disclosure statement or any of the prescribed certificates to the buyer before the contract was signed by the buyer;
  2. failed to provide an accurate or complete statement or certificate in relation to a material matter affecting the lot, provided that:
    • the buyer is not aware of the correct state of affairs concerning the matter at the time of signing the contract; and
    • if the buyer had been aware of the correct state of affairs concerning the matter, the buyer would not have signed the contract.

Pursuant to reg 10 of the Regulation, a material matter does not include information relating to water and rates charges.

Repay deposit and interest accrued

The seller must repay the deposit and any advance in payment of purchase price plus interest accrued on those amounts to the buyer within 14 days after termination.

Key takeaway

A seller in Queensland must strictly comply with the new regime to avoid risks of termination of contract by the buyer.

To ensure there is no dispute as to the timing of execution of the contract by the buyer, it may be prudent to request buyers to include their date of signing of all contracts issued or to be entered into around 1 August 2025.

If a contract is unlikely to be signed by the buyer before 1 August 2025, it is recommended to provide the disclosure documents upfront.

Similar mandatory disclosure regimes have been up and running in other States like New South Wales for quite some time. Compliance with this new regime in Queensland should not be overly burdensome on the seller and will, in our view, better balance out the risks between sellers and buyers in land contracts.

That said, a buyer is still highly recommended to not only rely on the seller’s disclosure documents but also complete a full or at least limited due diligence on the property, which if for whatever reason is not practical before entering into a contract then at the very minimum afterwards to check the disclosures.

In terms of termination rights, we expect that future amendment of the Regulation or judicial consideration may be required to clarify parts of the legislation including, for example, what constitutes a material matter. Watch this space.

If you would like to discuss this article with us, please contact Yanlie Leung, Senior Associate on (02) 9261 5900.