The Body Corporate and Community Management and Other Legislation Amendment Act 2023 (Amendments Act) was passed by the Queensland Government on 22 November 2023, limiting sellers from invoking sunset clauses to terminate off-the-plan contracts. But will these changes be enough to redress the power imbalance between sellers and buyers in these situations?
Key Takeaway Points:
- The Body Corporate and Community Management and Other Legislation Amendment Act 2023 (Amendments Act) was passed by the Queensland Government on 22 November 2023.
- The Amendments Act implements the Queensland Government’s proposal to limit sellers from invoking sunset clauses to terminate off-the-plan contracts.
- The purpose of these reforms is to strengthen buyer protections and redress the power imbalance between sellers and buyers in off-the-plan sales.
What are the sunset date reforms?
Previously there were no limitations under the Land Sales Act 1984 on a seller’s use of a sunset clause to terminate an off-the-plan contract. The reforms have now restricted sellers’ rights to do so to three circumstances:
1. With written consent of the buyer
The seller must give the buyer a sunset clause notice with the requisite detail at least 28 days before the sunset date. The notice will state that the seller proposes to terminate the contract if the buyer consents and give the reasons for the termination. The buyer must respond to the sunset clause notice by the day immediately before the sunset date and must act reasonably. A failure to respond will not result in an inference of consent.
2. By an order of the Supreme Court
The Supreme Court can make an order in favour of the seller that it is just and equitable to terminate the off-the-plan contract. Various matters must be considered by the Court prior to making such an order.
3. In another situation prescribed by the regulation
This situation is only applicable if a regulation prescribes another way for termination and the Minister is satisfied the prescribed way will adequately provide consumer protection.
Which contracts do the changes apply to?
Sellers and buyers should be aware that the Amendments Act applies retrospectively. All off-the-plan contracts regulated under the Land Sales Act 1984, that have not been settled, are subject to the new amendments.
The changes do not apply to proposed community titles schemes and similar off-the-plan lots. Building contract terms are also not affected and continue to be separately governed by the Queensland Building and Construction Commission Act 1991.
When will there be a review?
A review of the sunset date reforms is expected to take place in 1-2 years. Its purpose will be to assess the needs of property developers and buyers and determine whether further protections are needed for the increasing number of people buying in strata title schemes.
Further reforms
The Amendments Act has also implemented reforms to (for example) prevent the banning of pets, allow body corporates to make by-laws preventing smoking in outdoor / communal areas, permit the towing of vehicles etc.
Our Property team is happy to assist if you have any preliminary queries about how the proposed changes to Queensland’s sunset clauses in off-the-plan sales may affect you or your clients.
