Buying off-the-plan in Queensland Conveyancing Help
New Sunset Clause Conveyancing Laws in Queensland
Following extensive review the Queensland government has reformed the sunset clause laws to further protect consumers. Since November 2023 off-the-plan land contracts can now only be terminated by the Seller using the sunset clause in limited conditions which include:
with the written consent of the Buyer,
under an order of the Supreme Court
or under regulated prescribed circumstances
This does not include community title schemes for example apartments.
Previously Sellers were able to terminate a sale contract for ‘off the plan’ land if the contract included a sunset clause and failed to settle by a proposed date. To invoke the sunset clause from 22 November 2023 the Seller must now follow the new laws by obtaining the Buyer’s written consent or an order from the Supreme Court.
This change applies to all exisiting off-the-plan contracts unsettled by 22 November 2023 and new ‘off the plan’ contracts signed on or after 22 November 2023.
Conveyancing Legal Terms Explainer
What is an ‘off-the-plan’ land sale contract?
When you choose to buy a property ‘off the plan’ you enter into a non-standard contract of purchase before the title to the lot of the land has been registered and/or before the construction of the building.
What is a conveyancing sunset clause?
A sunset clause in an off-the-plan contract is a written condition that allows either the Buyer or Seller to end the contract if the conveyance isn’t settled within a specified timeframe.
This may occur if the developer does not meet the due date for completed construction as set out by the sunset clause. In this case the Buyer is within their legal rights to terminate the contract and have their deposit returned.
It is strongly recommended to seek legal advice before entering into a non-standard ‘off the plan’ contract or a contract with the added condition of the sunset clause.
Access to the Deposit
In addition the new Queensland government reforms restrict Sellers from early access to any deposits paid under an ‘off the plan’ contract. These deposit funds can only be released to the Seller on settlement or if the contract is otherwise finalised and the Seller is deemed entitled to the deposit.
Off-the-plan contract Liabilities
Signing an off-the-plan contract can involve different risks whether you are Buying or Selling.
For the Buyer these can include not being able to inspect the property until after settlement, future unseen construction delays, market changes to the value of the property before and after settlement, special conditions written into the contract that increase the likelihood of termination before settlement.
What is a disclosure statement?
The Seller’s Disclosure statement must be provided by the seller and include the following:
Sellers name and address
Buyer’s name and address
Identification of the land or unit, proposed lot by disclosing the number of the proposed lot, the total area of the proposed lot and the proposed orientation of the lot by referring to the north.
A record of the Sellers claims or promises about a future certificate of title
The Buyer must sign and date the disclosure statement.
In addition a section of the disclosure statement must include
detail of the proposed state of the lot on the date of possession by the buyer
any information detailing the work to be done by the developer
completion by a cadastral surveyor
When can you cancel an off-the-plan contract in Queensland?
Depending on the conditions of the contract you may have the right to terminate if there are any changes to the initial disclosure about the state of the land whereby the change is deemed ‘material prejudice’ causing a significant disadvantage for example the developer has changed the property and significantly reduced the size.
The Queensland court has outlined a precedent to determine if the disadvantage is material prejudice. It is strongly recommended to consult with a conveyancing lawyer each step of the conveyancing process to ensure that you understand each contract condition, legal term and your rights within the law to avoid any financial or legal risk.
The contract therefore may be terminated due to material prejudice before the title of ownership is transferred to the buyer or within 30 days of the developer’s notification of the ‘material prejudice’ changes made.
Determining whether the disadvantage is considered material prejudice requires the legal knowledge and expertise of a conveyancing solicitor to interpret both the conditions of the signed contract and the correspondence of the circumstances to the legal precedent.
Failure to settle by the Seller
According the the Land Sales Act 1984 the Seller of a proposed lot is required to settle the contract no later than 18 months after signing of the contract by the Buyer and Seller.
The Land Sales Act does not allow the Seller the right to terminate an off-the-plan contract after 18 months, however they can include this right into the sales contract through sunset clauses.
Future Sunset Clause Reforms
The Queensland government will continue to review the recent changes in one to two years to find out if there are additional reforms needed for proposed community titles and proposed off the plan lots for apartments and townhouses.
QUEENSLAND’S TRUSTED CONVEYANCERS
Engaging a trusted conveyancing solicitor to help communicate between the seller, buyer and any property developer during the conveyance can ensure ongoing and reasonable negotiations should any unforeseen changes, difficulties or problems arise. Contact our helpful Conveyancing experts at Horrocks Solicitors for a free contract review or your free fixed conveyancing quote 07 3013 2300 reception@rivercityconveyancing.com.au