Publications > Property > Proposed changes to the Land Sales Act

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Proposed changes to the Land Sales Act

The Land Sales Act was introduced in 1984 to deal with problems caused by the sale of improperly described land in the 1960s and 1970s and applies to both strata and non-strata property which is off the plan. In accordance with a recommendation made in 2001, the Queensland Government has reviewed the Act and has now released a consultation paper seeking feedback on proposed amendments to the Land Sales Act 1984 (Qld) (Act) by 5pm, Friday, 30 November 2012.  The most important amendments include:

(a)     allowance for the sale of freehold unregistered land prior to receiving an effective development permit;

(b)     requirements for additional information to be included in disclosure plans of lots sold under the Act;

(c)     a requirement that disclosure plans be certified by a cadastral surveyor;

(d)     changes to the definition of significant variations and to when a significant variation notice must be given;

(e)     the removal of the 10 per cent deposit rule; and

(f)       general modernisation of terminology within the act.

Sale of Freehold Property prior to receiving permits

The first proposal dealt with in the paper seeks to allow a person to sell freehold unregistered land prior to receiving an effective development permit, compliance permit or an urban development area development permit. This change would remove the regulatory burden on developers to ensure that all permits are obtained prior to advertising and selling proposed off title developments. The paper notes that this removal will bring Queensland in line with the legislation of the other states and will also allow consumers to enter into contracts at an earlier stage at no increase in risks. Consumer protection remains available to ensure that the Buyer is able to avoid the contract where either:

(a)     a significant variation occurs; or

(b)     the title remains unissued for 18 months.

Additional Disclosure Requirements

The paper also proposes that the following disclosures requirements are to be included in a disclosure plan:

(a)     disclosure any plan for reconfiguring a lot forming parting of a development permit, compliance permit, or Urban Development Area Development Permit;

(b)     the disclosure of existing surface contours;

(c)     the disclosure of any interest which will burden the proposed land (e.g. Easements);

(d)     the disclosure of all proposed infrastructure services including sewerage, drainage, gas, communication services, roads, electricity, and water supply;

The paper further recommends that disclosure plans must be certified by a cadastral surveyor.

Changes to the definition of “Significant Variation

Proposal 9 suggests a relaxed the definition for Significant Variation so that a variation of 2% in the area only applies to proposed land of less than 2000m2 and for land of more than 2000m2 the percentage variation would be 5%. While this change has no impact for properties less than 2000m2, the percentage variation for properties over 2000m2 has significantly increased.

Timing of the Significant Variation Notice

The paper suggests that the significant variation notice required under s 10(2) of the Act should be given with 14 days of the seller becoming aware of the significant variation, rather than limiting it to within 14 days of the seller providing the survey plan to the Buyer. The paper is currently seeking feedback as to what events should trigger the seller becoming aware of a Significant Variation.

The 10 percent deposit rule

Currently section 11A of the Act limits deposits for proposed allotments to 10% of the purchase price. Further s 71 of the Property Law Act 1974 (Qld) deems a deposit of more than 10% of the purchase price, to be an instalment contract. This has significant consequences for sellers as it prevents the contract from being terminated immediately where a buyer breaches certain conditions in the contract, for instance any default in payment. Section 72(1) of the Property Law Act 1974 (Qld) requires the seller under an instalment contract to give the buyer 30 days’ notice that the payment is overdue and that the seller intends to terminate the contract and allowing the Buyer the opportunity to remedy the default.

The paper suggests that this deposit rule should be amended in both the amendments to the Act and the Property Law Act 1974 (Qld) to allow greater deposit amounts as this would provide benefits such as:

(a)     greater security for long term developments where financial arrangements need to be flexible;

(b)     facilitating developer’s ability to obtain finance; and

(c)     discouraging foreign buyers from terminating due to changes in land values.

The paper notes that common law doctrine of penalties and equitable relief will still operate to ensure that consumers are protected from penalty clause requiring deposits of more than 10% to be forfeited to the seller.

The paper is currently calling for submissions on what should be the maximum percentage and whether the Seller should be able to retain amounts greater than 10% of the purchase price.

 

For more information on the consultation paper and property development, please contact Gavin McInnes on 3009 8444 or g.mcinnes@rclaw.com.au.

 "The information contained in this article is general in nature and cannot be regarded as anything more than general comment. Readers of this article should not act on the basis of this comment without consulting one of Rostron Carlyle's legal practitioners who will consider their particular circumstances".

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Gavin McInnes
Partner

supervising partners

Gavin McInnes

Partner
Office 07 3009 8444
Email g.mcinnes@rclaw.com.au

lawyers

Daniel Lilley

Special Counsel
Office 07 3009 8444
Email d.lilley@rclaw.com.au

Elicia Lin

Associate
Office 07 3009 8444
Email e.lin@rclaw.com.au

Kyla Brose

Lawyer
Office 07 3009 8444
Email k.brose@rclaw.com.au