Time For Change – Queensland’s New Property Law Bill

Property law in Queensland could soon see significant changes with the nearly 50-year-old Property Law Act 1974 (QLD) to be replaced by a new bill. In this article, our Commercial and Property Law Team examines the key amendments and changes under the proposed bill and what it will mean for property owners and the industry.

BACKGROUND

A number of laws and complex principles govern property and property rights in Queensland. However, many of these fundamental property rights and principles are enshrined in or have been interpreted from the long-adopted Property Law Act 1974 (QLD) (‘PLA’).

Since its inception, the PLA has largley remained untouched, however, this is soon to change with the Property Law Bill 2023 (‘Bill’) being introduced to Parliament in the last few weeks. The Bill, based upon over 200 recommendations from the Commercial and Property Law Research Centre at QUT, is set to introduce several significant changes to how property is dealt with and will replace the longstanding PLA.

KEY CHANGES

The Bill aims to modernise property law and the PLA to reflect contemporary commercial practices and languages. The Bill also amends and consolidates other important Acts, such as the Body Corporate and Community Management Act 1997, the Property Occupations Act 2014 and the Limitations of Actions Act 1974.

While there are too many changes to list, the key additions and amendments to the PLA under the Bill are as follows:

Leases

Currently, under an assignment of lease, a tenant who assigns their interest and any guarantor is typically not released from liability upon assignment, except in certain circumstances, such as where the lease is a retail shop lease or where the lease prescribes a release of liability. This means tenants and guarantors who do not secure a release of liability may be held accountable for any breach by the assignee (i.e. the new tenant) or any subsequent assignee.

Under the Bill, a Tenant (and any guarantor) who assigns their interest under a lease will be released from liability when an assignee assigns their interest to a subsequent assignee. This statutory release of liability means that a tenant will not be liable for any breach of the subsequent assignee. However, Tenants will still be liable for any breach of the initial assignee unless the lease or legislation states otherwise. The release provided for in the Bill cannot be excluded by contract, and any provision in a lease to the contrary will be deemed void.  As a result, Landlords will also need to start considering whether they are satisfied with any covenant and security provided by a proposed assignee.

Another important inclusion in the Bill is the ability of tenants to apply to the courts to recover damages where landlord consent to a lease dealing (including an assignment) is ‘unreasonably withheld’.

Deeds

The limitation period for bringing an action based upon a deed under the Limitations of Actions Act 1974 will be decreased from 12 years to 6 years under the Bill. This means that a person in Queensland will have a much shorter period to commence proceedings after a cause of action arises, especially considering other states still have limitation periods of 12 years or longer for deeds.

In Victoria and South Australia, the limitation period for an action based upon a deed is 15 years!

This change also removes one of the main distinctions between a deed and an agreement (i.e. contract). While the benefit of a more extended limitation period may have offered some incentive for opting for a deed rather than a contract, this change will likely not discourage parties from entering deeds, given the many other benefits deeds provide – including the ability to enforce a deed where there is no consideration provided.

Contracts of Sale

Under a contract of sale, time is typically of the essence. This phrase means that timing is essential to the performance of the contract and that the parties must strictly perform their obligations within any specified time or due date. Failure to do so may entitle a buyer or seller to exercise certain rights, and under the REIQ Contract of Sale if settlement does not occur by 4pm on the settlement date, then the party not at fault may terminate the contract and seek compensation.

Despite the above, new provisions in the Bill state that time will now stop being of the essence in certain situations. These situations, defined in the Bill as ‘Adverse Events’, including where a party cannot complete settlement due to:

(a)       Cyclone, fire, flood, landslide, seismic event, storm, storm tide, tsunami or tornado

(b)       Public health emergencies under the Public Health Act 2005

(c)        Requirements to comply with a lawful direction or order given by a government entity under a law of the Commonwealth or a State

(d)       An act of terrorism, activity related to war, civil commotion, public disturbance, or riot; and

(e)       An explosion or sudden impact of an object, for example, an aircraft or object from space.

This inclusion is quite reasonable and will act as protection for a party which through no fault of their own is unable to attend or complete settlement. That said, time will continue to be of the essence once notice is provided by the party who could not complete settlement. Notice must give notice as soon as practical and a party cannot cause unreasonable delay.

E-Conveyancing

The Bill also introduces new provisions that address electronic conveyancing (‘eConveyancing’). For instance, the Bill incorporates a provision regarding the issue of inoperative computer systems on the day of settlement (similar to that contained in the REIQ contract of sale). These insertions are especially relevant given the recent eConveyancing mandate, which was enacted on 20 February this year.

Details of the eConveyancing mandate and eConveyancing generally can be found in our article from earlier this year: Click Here

Seller Disclosure Scheme

Arguably the most contentious inclusion in the Bill is the introduction of a new statutory seller disclosure scheme. Under this scheme, sellers will be required by law to disclose certain information about the property to prospective buyers by way of a seller disclosure statement.

For further information on the scheme and the requirements of sellers, please see our separate article on mandatory seller disclosure: Click Here

Other Amendments:

The Bill also proposes several other notable changes, including:

• a person may transfer or lease property to themselves without the interests merging
• the abolishment of escheat, being a principle where property would revert to the Crown if the owner died intestate or breached their ‘feudal bond’;
• updated penalties for holding over after a life estate ends
• in addition to other liabilities and debts, receivers must apply money received to the payment of any other mortgages over the property before distributing the balance of any sale proceeds to the owner.

CONCERNS

Although the Bill is still subject to change, the Real Estate Institute of Queensland (‘REIQ’), which is considered the ‘peak body for the real estate industry in Queensland’, have listed some concerns with the Bill in its current form.

These concerns and apprehensions mainly centre around the proposed seller disclosure scheme. REIQ CEO Antonia Mercorella said, “it’s alarming that the proposed legislation has been introduced into Parliament while we are still working through key stakeholder consultation”.

These concerns raised by the REIQ include the:

(a)       impracticality and unnecessarily complex requirements concerning the provision of a disclosure statement at auctions

(b)       counter-productive and regressive reintroduction of Community Management Statement disclosure when selling lots in a Community Titles Scheme

(c)        ambiguity regarding circumstances giving rise to buyer termination rights

(d)       onerous obligations on sellers to disclose unregistered encumbrances

(e)       yet to be determined flood-related disclosures and warnings

RAMSDEN LAWYERS – IMPACTS AND HOW WE CAN HELP

While the Bill has only just been introduced to Parliament, and it may still be some years before it receives assent, property owners and those dealing with property must be aware of their obligations. They should start considering how they will adapt to these changes.

If you are seeking legal advice, Ramsden Lawyers can assist you. We are happy to arrange an obligation-free initial consultation to assist you in navigating the procedures set out under the relevant legislation for your circumstances.

Contact our lawyers today to learn more about these changes or for assistance with your conveyancing and property needs.

The content of this article is intended to provide general guidance to the subject matter and must not be relied on as legal advice. Specific advice should be sought about your circumstances.