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Commercial Property Alert: Proposed changes to the Land Sales Act 1984 regarding sunset dates for unit sales: Less red tape for Queensland developers - 24 Oct 2011

The Criminal and Other Legislation Amendment Bill 2011, recently introduced into Queensland Parliament, amends the Land Sales Act 1984 so that the traditional 3.5 year 'sunset date' for settlement to take place when selling a proposed lot may now be extended to up to 5.5 years from the contract date. If the Amendment Bill is passed, there will be no need for a developer to first apply for and obtain an extension of the 3.5 year period.

Here, senior associate Angie Coleman and solicitor Lucy Elkins outline the key changes introduced by the Amendment Bill and comment on their effect on the development industry.

Key changes introduced by the Amendment Bill

The proposed amendments to the Land Sales Act will reduce red tape for developers, who require a sunset date for a proposed lot beyond 3.5 years from the contract date.

Generally, only larger-scale projects have been granted additional time, and a developer had to apply for and obtain this extension before beginning the sales phase of the project.

Now, developers will be able to specify in the contract the time for giving the registrable instrument of transfer to the buyer (the time by which settlement is to occur), which may be up to a maximum of 5.5 years from the contract date.

If the Amendment Bill is passed:

  1. A buyer will be able to cancel a contract to buy an off-the-plan community title lot if the developer has not, unconditionally, given the buyer a registrable instrument of transfer within an 'unqualified settlement period or time' specified under the contract (up to a maximum of 5.5 years). An 'unqualified settlement period' would be a stated number of months or years from the contract date, while an 'unqualified settlement time' would be a particular date specified in the contract.
  2. The unqualified settlement period or time must not be subject to a right of extension by the developer, or be conditional on a certain event happening. This will mean that sunset date provisions in sale contracts must be carefully drafted so that they comply with the requirements.
  3. If the contract does not contain an unqualified settlement period or time, a buyer will be able to cancel a contract if the developer has not given the buyer, unconditionally, a registrable instrument of transfer within 3.5 years after the contract date. In other words, a default sunset date of 3.5 years from the contract date will apply.

The proposed amendments will apply only to contracts entered into after the amendments become law.

How do these changes affect the development industry?

While we anticipate that the proposed amendments will be welcomed by the industry, developers will need to carefully consider the way contracts are drafted.

If a developer wants to include a sunset date that is beyond 3.5 years in their off-the-plan contract, the relevant clause will need to be drafted so that the sunset date can not be extended and is not conditional on a certain event happening.

If the relevant clause is not drafted correctly, the developer will only be entitled to a 3.5 year sunset date.

When will the proposed amendments become law?

The Bill was introduced into the Queensland Parliament and read for the first time on 13 October 2011, and is currently in its early stages. We will provide further updates about the changes and how they affect developers once the amendments become law.

For more information on these amendments or on the use of sunset dates in developments, please contact HopgoodGanim's Commercial Property team.