New Property Law Coming
Whether you’re saying hello to your dream home or bidding adieu to a property filled with memories, the recent changes in Queensland’s legislation are worth a closer look. Let’s break down what this means for everyday folks involved in the residential property market.
The Property Law Act 2023 (the Act) was passed by Parliament on 25 October 2023 and represents the first comprehensive reform of the Property Law Act 1974 since it was introduced. The new act aims to reflect modern approaches to property transactions. While it retains many provisions, it will affect the nitty-gritty of buying or selling a home when it comes into effect.
When Will It Come Into Effect?
After an act has been passed by Parliament, legislation commences by proclamation (it receives Royal Assent). There could be a period of up to 12 months before it commences, during which there is likely to be extensive consultation and industry training for implementation. It is important to understand that it will change the rulebook for real property transactions, and understanding its ins and outs will be vital for a smooth experience.
Key Changes In The Property Law Act
1. Property Title Registration
This part of the Act deals with how your property ownership is officially recorded. The changes aim to streamline this process, making it more efficient. What it means for you: less bureaucratic red tape when it comes to transferring real estate ownership.
2. Seller Disclosure Requirements
Imagine buying a house and discovering unexpected surprises later – the Act aims to minimize these unwelcome shocks. A statutory disclosure scheme will put more onus on the seller’s responsibility to provide a disclosure statement for freehold property as well as a list of searches and certificates before a contract is signed. The list of prescribed information and certificates will be contained in a regulation under the Act, which means this list can be altered over time without resorting to Parliament.
There are some exceptions, for instance:
- neighbouring landowners might agree on a sale to effect a boundary realignment
- a buyer may waive the disclosure requirement in a sale between related parties eg family members
- court ordered sales
- under certain circumstances where an option is being exercised
- sales where the price exceeds an amount, proposed at $10 million, again where a buyer waives the requirement
- some specified circumstances for sales by the state to a tenant of a certain number of years
- and beyond that there are exclusions for a range of corporate, state, and statutory body entities.
For general purposes, residential purchases and commercial, it is important to remember that better upfront disclosure from sellers about a property’s condition and any potential issues makes property purchases more transparent. In simple terms, it’s about ensuring you know exactly what you’re getting into before signing on the dotted line.
The disclosure scheme also provides buyers with the right to terminate a contract if they do not receive disclosure documents or if the disclosure documents are materially incomplete or inaccurate. In other words, if the seller does not provide the required information, the buyer can end the contract. If the seller doesn’t provide complete information, or they hand over incorrect information, and the information is important, the buyer can pull out.
3. Easements and Covenants
These are legal terms that essentially define the rights and responsibilities tied to your property. The Act will alter how these work and they will work retrospectively. That means they will apply to all arrangements about easements, and it won’t matter when those arrangements are made. Essentially, the aim will be to make covenants on easements binding on future landowners, as the title to the land passes from one person to another. Currently, this is not the case, and it causes all sorts of issues.
Less Paperwork, Quicker Transactions
The Property Law Act reflects the efficiencies of the digital age – e-conveyancing, and electronic files and records, streamlined processes. Less paperwork means a smoother process for both buyers and sellers. It’s about embracing technology to make the entire experience faster and more straightforward.
Changes to leasing
The Act will also introduce changes that will simplify the rules around leasing, with an emphasis on transparency and reasonableness.
For example, there will be a change in the responsibility of someone who leases a property who then transfers the lease to another person, and they, in turn pass it on to a third person. Say, Sue leases a home. She transfers the lease to Sharon who she knows and trusts. Sharon passes on the lease to her new friend, Jill. Currently, if Jill breaks the rules, Sue could be held responsible, even if she had no say in Jill taking over the lease. The new law will limit the responsibility of the original leaseholder to the next one. That means, Sue might be held responsible if Sharon breaks the lease rules (after all she chose her) but wouldn’t be held responsible for Jill’s actions.
Other changes will firm up the requirements for obtaining consent to transfer a lease and other leasing matters, including how long the person being asked for consent can take to give an answer.
Implications for Property Trusts
The new Act will replace common law and existing rules regarding the period that a property can be held in trust, after someone’s death. The new fixed perpetuity period will be 125 years and will apply to new trusts, while existing trusts will have options to adopt the rule.
Trusts are complicated. Any arrangements, or changes to them, need to be considered carefully as there are tax and duty implications as well as legal concerns. Establishment of or changes to a trust should only be undertaken when fully informed.
Other Changes
A range of old and unnecessary provisions will be removed in the new Property Law Act. For example, where the provisions are now covered by other acts, including the Family Law Act. The language will be modernised and take into account the various advances in electronic processes and services as well as respecting current practice. Consumer protection is a key theme, with a range of buyers’ rights being clarified for auctions, destruction/damage of a house under contract, and also when they buy from a mortgagee or receiver sale.
Addressing Concerns and Practical Implications
Navigating Change in Property Transactions
Change can be daunting, especially in something as significant as property transactions. The new Property Law Act may raise concerns. Whether you are planning to purchase or sell in the medium term, thinking about a trust or you are a property owner with concerns about leasing, seeking advice about the proposed changes and understanding the practical implications will help you navigate the new landscape with confidence.