In recent developments, changes to the Property Law Act in Queensland are set to significantly alter the current "buyer beware" approach in property sales. The new legislation, which is unlikely to come into effect before April 2024 or later, aims to enhance buyer protection by introducing a comprehensive seller disclosure statement requirement for all registered freehold lots, including lots in a body corporate and commercial properties. There will also be significant changes regarding easements and the statutory rights of use.
This article by Senior Associate Shaun Briffa explores the proposed changes, highlights potential implications, and emphasises the importance of legal compliance to avoid unfavourable outcomes.
What are the Changes to the Property Law Act?
The amendments to the Property Law Act will introduce a mandatory disclosure statement for all property sellers, in addition to the separate disclosure required when selling a lot in a body corporate.
Download the Snapshot of Changes here.
What is a Seller Disclosure Statement and What Must it Include?
This new statement is intended to provide buyers with crucial information about the property they intend to purchase. Prescribed documents, such as copies of the survey plan, title searches, and other relevant notices, must be attended.
Additionally, sellers will need to disclose details of the following areas:
- Unregistered encumbrances
- Proposed transport infrastructure projects impacting property boundaries
- Potential resumption
- Current rates and water charges
- Notice of unlicensed building work
- Pool certificates and information pertaining to contamination.
What is not included in the Seller Disclosure Statement?
It is important to note that the draft disclosure statement released by the government does not mandate the disclosure of the following factors:
- Structural defects
- Building approvals
- Service connections
- Planning law restrictions
- Flooding risks
- Current/historical property use.
This highlights a potential gap in the buyer's knowledge and underscores the need for due diligence beyond the information provided in the disclosure statement. Legal advice from an experienced property lawyer can be extremely advantageous to ensure potential buyers aren’t caught out by factors such as these. Get in touch with one of our Property Lawyers if you’re currently looking to sell your property or are a buyer in the due diligence phase.
What are my rights if the Seller’s Disclosure Statement is inaccurate or not provided?
Under the new changes, buyers will be granted termination rights if the necessary information is not provided or is found to be materially inaccurate.
To illustrate the potential consequences of non-compliance with the new legislation, let's consider a hypothetical scenario involving a real estate agent, a seller, and a buyer. The agent, acting on behalf of the seller, prepares a disclosure statement that contains missing and inaccurate information due to the seller's incomplete input and/or their own failure to provide correct information. In this case, the agent issues the disclosure statement to the buyer.
The buyer proceeds with the purchase after conducting necessary inspections, securing finance and receiving legal advice. However, shortly after the contract becomes unconditional, the Reserve Bank raises interest rates, causing financial strain for the buyer. Meanwhile, the buyer's lawyer conducts searches and discovers material discrepancies between the search results and the information provided in the disclosure statement. In this instance, the buyer is now legally able to terminate the contract.
Will there be Consequences for Seller’s not following the New Legislation?
When the changes come into effect, sellers and real estate agents will be required to provide mandatory disclosure statements. If this is not provided, buyers are able to exercise their right to terminate the contract, leading to a full refund of the deposit.
Consequently, the real estate agent, having prepared a non-compliant contract, will not receive their commission. The seller may then wish to initiate legal action against the real estate agent, seeking compensation for their losses.
What are the changes to come into effect for Statutory Right of Use Easements?
The new changes expand the rights of a landowner to seek a court order imposing the rights of use (general as an easement) over other land if it is proven that those rights are reasonably necessary for the effective use and development of the applicant's land.
A landowner can also apply for an order imposing a statutory right of use over other land in favour of a public utility, for similar reasons. The new legislation appears to be much broader than existing rights.
The Importance of Legal Compliance
To avoid such adverse situations, it is crucial for both agents and sellers to ensure compliance with the new Property Law Act (once commenced which could be as early as April 2024).
It is recommended that sellers engage their own legal representation to prepare the disclosure statement and if required, also obtain a Body Corporate Information Certificate from the relevant body corporate manager.
By adhering to the legislative requirements, buyers can make informed decisions, sellers can secure their sales, and real estate professionals can secure their commissions and avoid potential legal disputes.
How can a Lawyer help with a Property Purchase or Sale?
Engaging legal professionals as soon as the property is put on the market is advisable, to ensure compliance which will help facilitate smooth transactions, mitigate risks, and safeguard the interests of both buyers and sellers. It is vital for all parties involved to diligently comply with the new legislation to avoid unfavourable outcomes, such as termination of contracts, legal disputes, and financial losses.
The coming changes to the Property Law Act in Queensland aim to bolster buyer protection and transparency in property transactions. The introduction of a comprehensive seller disclosure statement requirement will provide buyers with essential information about the property they intend to purchase.
Keep informed with Argon Law. Our professional team is based in Maroochydore on Queensland’s Sunshine Coast, with many years of experience in Property and Commercial Law and are always available to help you with your legal requirements. Visit our website to find out more or browse our archive of informative property law articles.
