The Land Sales Act 1984 regulates “off the plan” sales in Queensland. This includes sales in both unit developments and housing estates.
Amending legislation, the Land Sales and Other Legislation Amendment Bill 2014 (the Bill), has been introduced into State parliament as part of the Attorney-General’s ongoing review and modernisation of Queensland property laws. The Bill was prepared in consultation with various peak industry bodies and therefore delivers on overcoming a number of practical and commercial issues faced by developers under the present legislation and reducing unnecessary red tape.
Probably the most welcome change, particularly for high-rise developers, will be the increase in permitted deposits. Developers of units, townhouses or land that will be in community title schemes will be allowed to take deposits of up to 20%. These still have to be held in a lawyer’s or real estate agent’s trust account until settlement. However the change will go some way towards reducing the risk for developers and financiers of deposits being inadequate to cover their losses when buyers fail to settle.
Pre-contract disclosure and other contract requirements
The Bill also proposes changes to the pre-contract disclosure and contract requirements for each type of off the plan sale. The requirements of “identifying” proposed lots in community titles schemes (CTS’s) will no longer appear in the Land Sales Act 1984 but will be part of a new combined disclosure statement and disclosure plan regime in the Body Corporate and Community Management Act 1997 (BCCMA). The amended Land Sales Act 1984 will deal only with non-CTS land. However the amendments will harmonise many aspects of the Acts. The following table summarises the changes:
Click here to view the table.
The Bill also proposes to amend the legislation dealing with agents' and lawyers’ trust accounts to provide a mechanism to deal with forfeited deposits where there is a dispute between the parties. The present position is that if the buyer disputes the seller’s termination of a contract (for example, by raising issues about defects in the property or that misrepresentations were made about the property prior to signing a contract), the deposit holder may have to retain the deposit until the parties agree how it should be released or the seller obtains a court order to establish it has validly terminated the contract.
The new laws will enable the stakeholder to give the buyer a notice of intention to pay the deposit to the seller (or vice versa) if the buyer does not commence proceedings within a specified period (of at least 60 days). The stakeholder will then be entitled to pay the deposit to the nominated party if proceedings are not commenced. This is expected to reduce the instances of buyers with unmeritorious claims frustrating sellers’ attempts to forfeit deposits in the hope of negotiating a refund of all or part of the deposit.
There is also a new requirement that, where a lawyer or agent holds a bank guarantee or deposit bond, if it is called on, the stakeholder is required to pay the proceeds to its trust account.
The Bill will introduce new sections into the BCCMA and LSA to clarify that where pre-contract disclosure is given before an option is entered into, it is not necessary to re-give the disclosure statement and plan before the contract is signed, except where a nominee buyer is introduced.