Positive changes to Queensland property laws

Articles Written by David Colenso (Consultant)

Queensland's Parliament has introduced more amendments to the state's property legislation that aim to streamline the sale of property, especially for the sale of lots 'off-the-plan'. The amendments will benefit developers.



  • 20 per cent deposits for off-the-plan sales
  • Five and a half year sunset dates for strata projects
  • No Land Sales Act for strata lots

Legislative framework

The LandSales Act (LSA) has been under review by the Queensland Government since 2010. The Act governs the sale and purchase of land that does not have its own separate title (both strata and non-strata). The Act was introduced in 1984 as a piece of consumer protection designed to protect buyers. The Land Sales & Other Legislation Amendment Act 2014 (the Act), passed by the Queensland Parliament in September 2014, is the result of a government review committee which considered responses to a public consultation paper in 2012. Johnson Winter & Slattery submitted a position paper to the Government which suggested that 30 per cent deposits should be permitted, and the Act goes some way to meeting that position.

In addition to sensible amendments to the LSA, the Act also amends the Body Corporate and Community Management Act 1997(BCCM) and crucially, the instalment contract provisions of the Property Law Act 1974(PLA). The critical amendment allows for an increase in deposits on off-the-plan contracts to 20 per cent without triggering the instalment contract provisions.

What does the Act amend?

Amendments to PLA

When the deposit exceeds 10 per cent of the purchase price, a contract becomes an instalment contract. The threat of an 'off-the-plan' contract being classified as an instalment contract has always been a major headache for developers. The Act amends the PLA in respect of 'off-the-plan' contracts, so that a deposit can now be up to 20 per cent of the purchase price without classifying the contract as an instalment contract. So, where the contract is terminated based on the buyer's breach and the deposit is forfeited, the vendor can retain a deposit of up to 20 per cent.

The change to 20 per cent will only apply to contracts entered into after the Act came into effect.

Amendments to the BCCM

The BCCM governs the sale of strata lots, but the LSA covered both strata and non-strata. The disclosure requirements relating to the sale of proposed strata lots, have now been transferred from the LSA to the BCCM. In summary, the disclosure requirements are:

  • The vendor must give the purchaser a disclosure plan (prepared by a surveyor) including prescribed information applicable to standard format lots and building or volumetric format lots. Details that must be included for building/volumetric lots are lot number, total lot area, the floor level of the lot and the proposed orientation of the lot by reference to north.
  • Any further statement which rectifies inaccuracies in a building/volumetric or standard format lot plan must be certified by a surveyor. This means that the old procedure relating to 'rectification statements', which could only be given after the strata plan was registered, no longer applies. This change alone will please developers who constantly faced challenges by loophole-seeking purchasers who tried to rely on inaccuracies in the rectification statements to terminate contracts.  
  • The obligation to hold money in an appropriate (i.e. lawyer's) trust account is now dealt with in the BCCM. Now, all deposits paid under any instrument (whether legally binding or not) relating to the sale or purchase of a proposed lot must be paid directly to the trust account of a law practice, real estate agent or the Public Trustee. Examples of these instruments are an option to purchase and an expression of interest. So, money paid under an option or an expression of interest must be paid into a trust account. This will change the current practice which allowed the vendor to initially receive the holding deposit and then transfer it to an agent or law practice trust account.

Further statements must now be given at least 21 days before settlement of the contract. And the requirement that they be given within 14 days after a seller becomes aware of any inaccuracies has been removed, so this removes another termination risk for vendors.

The disclosure requirements have been clarified so that a disclosure statement only needs to be given once in respect of an option (ie not when a contract is entered into upon the exercise of an option), so long as the buyer under the contract is the buyer under the option. Where a new buyer is nominated as buyer under the contract entered into upon exercise of the option, the nominee must be given a new disclosure statement.

Another welcome innovation for developers allows sellers to nominate a five-and-a-half year sunset date for settlement. If they fail to do that, settlement must occur within three-and-a-half years after the contract is entered into. This change removes the existing unwieldy process to have a statutory regulation passed to extend the three-and-a-half year sunset date.

For the first time, bank guarantees and similar securities are specifically dealt with in the Act. The bank guarantee must be returned in exchange for the amount it secures and otherwise be held by the deposit holder in the same way as a cash deposit.

Amendments to the Building Units and Group Titles Act 1980 (BUGTA)

The BUGTA regulated the creation of strata lots. The amendments to the BCCM have, where necessary, been duplicated in the BUGTA so there will now be consistency between the two Acts.

Amendments to the LSA

  • The provisions dealing with the sale of proposed strata lots has been moved to the BCCM.
  • Definitions have been updated and clarified. The definitions of buyer and seller are now used consistently throughout the LSA.
  • The disclosure for contracts arising from the exercise of an option have been repeated in the LSA.
  • The requirements for disclosure plans are now consistent with those in the amended BCCM. Now, a further statement correcting differences must be given at least 21 days before the settlement. There is now an obligation to include a plain English explanation of the general effect of the differences so that purchasers can quickly identify changes.
  • The 18-month period in which settlement must occur continues.
  • Dealing with money paid relating to a sale transaction, including bank guarantees, is duplicated in the LSA based on the BCCM amendments.

Legal Profession Act 2007

Litigation plagued developers wanting to access forfeited deposits. Previously, a buyer merely had to raise a dispute in respect of a deposit, and this effectively prevented the deposit holder from releasing the deposit. The only remedy was litigation. Now, where a deposit is disputed, if a law practice reasonably believes one of the parties is entitled to the deposit, it can give a 60-day notice to the parties stating how it intends to pay out the deposit. Unless legal proceedings are issued, or the parties agree to a disbursement of the money within that 60-day period, the money can be paid out as indicated in the notice. This will streamline the forfeiture and pay out of deposits where one party is clearly in default and the other party should receive the deposit.

If the law practice distributes the money after following the procedure, it will not be liable to a party for inappropriate disbursement of the money. However, the disbursement of the money does not prevent a party pursuing a claim against the recipient of the payment.

Similar and consistent amendments are proposed to apply to real estate agents.

What does this mean for developers?

  • Deposits of up to 20 per cent can be requested for 'off-the-plan' contracts. Critically, the increase from 10 per cent will enable financiers to increase the number of qualifying foreign contracts for funding purposes.
  • Strata lot disclosure requirements are now all contained in the BCCM. Further statements can be given promptly after lot details change (rather than waiting to give a rectification statement after the strata plan is registered).
  • Holding deposits under expressions of interest must be paid directly into the trust account of a real estate agent or law practice.
  • An automatic sunset date of five and a half years applies for settlement of strata lot sales (if the contract provides for that) without the need to apply for a statutory regulation.
  • The requirements for disclosure plans (strata and non-strata) have been clarified.

Moving forward

The Act contains sensible and practical amendments. It addresses many of the outdated consumer protection elements in the amended legislation which will streamline and improve the highly regulated property sale process. Developers will welcome the changes as redressing some draconian provisions which unfairly favoured purchasers. The Act is a very good step in the right direction.

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