Countdown to change: commencement of the new Property Law Act in Queensland next week

The Property Law Act 2023 (2023 PLA) commences next week on 1 August 2025. The 2023 PLA will apply to land in Queensland and any other property (ie. personal property) or documents governed by Queensland law, even if the personal property is located, or the document is signed, outside of Queensland.

Some sections in the 2023 PLA will apply retrospectively. Others will only apply going forward.

Set out below are some key things to think about in relation to the new Act.

Selling property

After 1 August 2025, if you are selling real property (ie. real estate) in Queensland (including as a mortgagee), you will need to comply with the new disclosure regime in section 99 of the 2023 PLA unless you fall within one of the exceptions under section 100, which include:

• if the buyer is the State, Commonwealth or another State, a local government, a statutory body or a listed corporation or subsidiary of a listed corporation; or

• if the price is >$10 million (inclusive of GST) and the buyer gives a notice waiving compliance before the buyer signs the sale contract; or

• if the seller and the buyer are related parties and the buyer gives a notice waiving compliance before the buyer signs the sale contract.

The regime will require you to give the buyer certain information before the buyer signs the sale contract. This shifts the onus from buyer beware to informed consent, with key matters for disclosure including:

• Unregistered encumbrances;

• Contamination and environmental information;

• Transport infrastructure proposals;

• Zoning and heritage listings;

• Proposed Commonwealth or State resumptions;

• Energy efficiency ratings;

• Building and planning notices or orders; and

• Community Titles Scheme documents.

The disclosure must be provided in the prescribed form and be accurate when given. The disclosure must not be signed or used before 1 August 2025.

If the disclosed information is not accurate or complete in relation to a material matter and the buyer was not aware of that inaccuracy or omission when they signed the contract and would not have signed the contract if they had been aware, the buyer may terminate the contract by notice at any time before settlement: section 104. If a buyer does that, they will be entitled to be refunded any amount that they have paid towards the purchase of the property under the contract: section 105.

Buying property

If you are thinking of signing a contract to buy real property in Queensland after 1 August 2025, carefully read the disclosure information that has been provided to you before you sign. Make sure you understand what information is not required to be disclosed by the seller and consider if you require further information before entering into the contract. If in doubt, seek legal advice.

If you have signed a contract to buy a residential house or unit and before settlement it is damaged so that it is unfit for occupation, you will be entitled to rescind the contract. Under changes to the PLA, the seller now has the option of restoring the property. If you want to rescind the contract, you must give the seller a notice of rescission before you take possession of the property, settle the contract or the seller restores the property: section 77(2). If you do that, you will be entitled to be refunded any amounts that you have already paid under the contract (even if they are expressed to be non-refundable): sections 77(5) and 77(6). If, before you give your notice, the house or unit is restored and the seller gives you notice of that fact, your right to rescind the contract ends.

Easements over land that are registered on the land titles register and that impose any obligation (whether positive or negative) in relation to the use, ownership or maintenance of the land may bind you. See below for further details.

New REIQ contracts

New versions of the REIQ residential and commercial contracts will be released on 1 August 2025. The new contracts include additional conditions dealing with the disclosures and associated issues. There are only two new contract forms (compared to four currently), one for residential property and one for commercial property. Each contract covers usual broadacre as well as community title land. Buyers and sellers will need to consider whether they require any amendments to the new conditions and/or additional special conditions.

Instalment contracts

There are a number of changes to the way in which instalment contracts work.

These changes include:

• clarifying that payments of interest, rates, rent and payments for extensions are not instalments;

• a requirement for a notice from the buyer before contracts which are potentially instalment contracts become instalment contracts; and

• removing the buyer's right to require an early transfer of the property and mortgage back after paying one-third of the purchase price. Under the 2023 PLA, the buyer can settle early by giving the seller at least three months' notice and paying the balance purchase price at settlement.

The instalment contract provisions do not apply in respect to the Commonwealth or State Governments.

Leasing

If land is subject to a registered lease, every term of that lease (including terms which do not touch and concern the land) will bind any buyer of the land unless one of the exceptions in section 140 applies. Those exceptions include if the lease provides that a term is personal to the seller / lessee.

The buyer should promptly send notice of their purchase to the lessee. Until they do that, the lessee can continue paying rent to the seller: section 141.

Typically, a lessee is restricted under a lease from doing certain things without first obtaining the lessor's consent. The 2023 PLA will regulate how that consent is to be sought and given in relation to certain restrictions in a lease: see section 142. Those restrictions include:

• the assignment of the lease;

• entry into a sub-lease;

• creation of a mortgage over the lessee's interest in the land.

Lessors will not be allowed to unreasonably withhold their consent. They will be required to give written notice of their decision to the lessee within 1 month of receiving full particulars (or such longer period as agreed between the lessee and lessor). Careful review of and compliance with section 142 will be necessary. It applies to all leases, whether created or registered before or after 1 August 2025: section 255(1).

A notice to remedy a breach will need to be given by a lessor not only to the lessee but also to "designated persons": sections 153 and 154. The definition of designated person is broad and includes a mortgagee or receiver of the lessee's interest in the land, a guarantor of the lease and any sublessee: section 152. Failure to provide notice to the designated persons does not invalidate the effect of the notice to remedy breach.

If a lease is assigned after 1 August 2025 by a lessee (the "first assignor") to another person (the "assignee"), then regardless of the provisions in the lease, where the assignee assigns the lease to another person (the "subsequent assignee"), the first assignor and their guarantors will be released from liability for any breach of the lease by the subsequent assignee: section 144. That section only applies to leases entered into after 1 August 2025: section 255(2).

New PLA forms

In addition to the new disclosure form, new PLA forms have been published on the Queensland Government's publication portal. These new forms will also come into effect on 1st August 2025.

In a number of cases notices must be in the approved form where approved forms were not previously mandated, for example: notice to remedy breach under a lease and notice of intention to refuse to renew or extend a lease.

Easements

Registered easements that impose any obligation (whether positive or negative) in relation to the use, ownership or maintenance of the land will continue to bind the owner of the land and the grantee after a sale or transfer unless they are expressed to be personal: section 65. Previously, only negative covenants ran with the land.

Obligations relating to the use, ownership or maintenance of land include obligations to:

• indemnify any party to the easement in connection with its use;

• maintain or repair the burdened land;

• replace improvements or infrastructure on the burdened land in connection with the easement;

• pay or contribute to the payment of rates or taxes; and

• insure, pay or contribute to insurance.

This section in the 2023 PLA applies to all easements, whether created or registered before or after 1 August 2025: section 247.

Application of insurance money under mortgages

Mortgages often require a mortgagor to insure the mortgaged property for its reinstatement value. If a mortgagor does that and receives money under that insurance in relation to the mortgaged property the mortgagor may insist that the money is applied towards reinstatement of that property (rather than towards repayment of the monies owed to the mortgagee): section 122(3) and (5). That right will override any right that the mortgagee may have in relation to the application of those monies. The section cannot be contracted out of: section 122(6).

Preparing documents

Start date: For contracts signed on or after 1 August 2025 make sure there is a disclosure statement (if required) and use the new version of the REIQ residential and commercial contracts. Do not use the disclosure statement or new contracts for signing before 1 August 2025.

Guarantees and indemnities: Make sure guarantees and indemnities are in writing and signed by the guarantor / indemnifier.

A guarantee (including any indemnity) to which the Queensland law applies will not be enforceable unless it is in writing and signed by the guarantor.

Subject to any requirements of the National Consumer Credit Protection Act 2009, the guarantee may be:

• an electronic document; and

• digitally signed (section 69).

Type of document: Consider if you should draft a document as a deed or an agreement.

Historically, some parties have insisted that documents be drafted as deeds in Queensland because:

• the limitation of liability period was longer for deeds (12 years) than agreements (6 years); and

• entry into an agreement requires the giving of "consideration".

The limitation of liability period for deeds entered after 1 August 2025 will be 6 years (the same period as applies to agreements): section 285 of the 2023 PLA.

After 1 August 2025, the primary reason why parties will enter into a deed will be that there is no consideration to support the entry into an agreement.

Assignments of debt

At the moment, in Queensland, you cannot assign part of a debt at law.

After 1 August 2025, you will be allowed to: sections 190 and 191.

If a debt is assigned to a person (called the assignee) then the payer of the debt should be notified of the assignment. If they are not notified, the payer can continue paying the assignor.

Changes to perpetuity periods

In Queensland, property cannot be held on trust indefinitely. It must "vest" within a period called the "perpetuity period". Under the 1974 PLA, the perpetuity period is a maximum of 80 years. There is also a 21 year limit under the 1974 PLA for option periods and pre-emptive rights to purchase real property.

Under the 2023 PLA:

• the common law rule against perpetuities is abolished;

• the 1974 PLA 21 year limit for options to purchase and pre-emptive rights no longer applies;

• the maximum perpetuity period will be extended to 125 years: section 201. Trustees of existing trusts may opt into the longer period. If they have the power to vary the vesting date of the trust, they can do that: section 216. Otherwise, they will need all of the beneficiaries of the trust to sign a variation deed: section 217. A trustee should seek tax advice before opting into the longer period; and

• certain trusts and commercial arrangements are exempt from having perpetuity periods: see sections 212 and 213.

Service of documents

Updated rules will apply to the service of documents, mostly in relation to electronic communication. These are set out in sections 229 to 233 (inclusive).

Please get in touch with us if you need any advice on the 2023 PLA and how it may affect your business or documents.