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Off-the-plan contracts and body corporate amendments

News

Here, we review the looming legislative changes aimed at limiting the use of sunset clauses in off-the-plan contracts and amendments to Community Titles.

A parliamentary committee has approved the passage of a new Bill in Queensland that will result in an overhaul to the state’s body corporate legislation.

The Body Corporate and Community Management and Other Legislation Amendment Bill 2023 was introduced to Parliament on 24 August 2023.

The Parliamentary Legal Affairs and Safety Committee published its report on the amendments last month, recommending the legislation be passed.

The committee was tasked with assessing the policy goals of the Bill and making sure that the proposed changes considered the rights of individuals.

The changes will affect buildings that are run as community titles schemes, including duplexes, townhouses, shopping centres and apartment buildings. While the Bill includes several important amendments, chief among them is the move to better protect buyers by limiting the use of sunset clauses for ‘off-the-plan’ contracts. Here, we look into the implications of these changes for both buyers and developers in the property market.

Focus turns to sunset clauses in off-the-plan contracts

What are sunset clauses?

Sunset clauses in off-the-plan contracts allow either party to terminate the contract if the completion of the property and registration of the plan does not happen by the sunset date, being 18 months for a land contract or up to 5 ½ years in an off-the-plan development contract.

What has changed?

Currently, a seller may terminate an off-the-plan contract automatically after the sunset date expires.

The new legislation provides that a seller under a sunset clause cannot automatically terminate an off-the plan-contract.

If a seller wishes to terminate the contract under the sunset clause, the buyer must consent in writing to the termination under the sunset clause.

What are the potential implications of this?

For developers, they will no longer be able to terminate off-the-plan contracts after the sunset date without the consent of the buyer and, for example, re-sell the property for a higher price to another buyer.

For buyers, they can feel secure that when they enter an off-the-plan contract they will not risk unilateral termination of the contract, if they still wish to proceed with the purchase at the contracted price (which is within their rights to do so).

It is important to obtain legal advice regarding such clauses to ensure that they are compliant with the relevant legislation.

Other important changes

The other relevant amendments to the Act include:

    • Termination of Community Titles Schemes: which allows for the termination (or closure) of a community title scheme with the support of 75% of lot owners, where the body corporate has agreed there are economic reasons for termination which meet defined thresholds. For example, if a developer wants to redevelop the land, or the community title scheme is so rundown that repairs are no longer viable.
    • Towing motor vehicles from common property (Section 163A): Bodies corporate will be allowed to tow vehicles that are preventing access or causing a hazard, provided the body corporate complies with the BCCM Acts by-law enforcement process including contravention notices and dispute resolution proceedings and must act reasonably.
    • Second-hand smoking (Section 167 and Section 169A): Under the new plans, bodies corporate will be empowered to make by-laws that ban smoking in outdoor and communal areas of a community titles scheme. The aim is to better protect residents from second-hand smoke.
    • By-laws about keeping animals: A committee or body corporate’s refusal to keep or bring an animal on the lot or common property on the grounds that no pets are allowed is unreasonable. Section 169B states that bodies corporate won’t be able to ban pets in community title schemes unless in specific circumstances.

    Rules will also be introduced that will make it easier for residents to lodge disputes and expand the powers of adjudicators. The QLD government has also said it will continue working with the Community Titles Legislation Working Group to consider further reforms related to harassment, bullying and management rights.

    Attwood Marshall Lawyers – helping property owners protect their real estate assets

    There are numerous complex legal issues around body corporate, strata, and insurance that buyers and sellers should be aware of when purchasing property in a community scheme.

    There have been several changes to legislation recently affecting community titles schemes, and our property lawyers have the state-specific knowledge and expertise to be able to advise buyers, sellers, and agents about governing regulations and issues that may impact your property transaction.

    As a PEXA certified law firm, we strive to ensure settlements proceed smoothly and happen on time, without any surprises along the way.

    Our offices are located at Coolangatta, Kingscliff, Robina Town Centre, Southport, Brisbane, Sydney, and Melbourne so that you can meet with one of our lawyers at a location near you.

    Our Robina Town Centre office is also open Thursday night until 9pm and Saturday morning until 12noon.

    To get professional and prompt advice, contact Property and Commercial Department Manager Jess Kimpton on direct line 07 5506 8214, email jkimpton@attwoodmarshall.com.au or call our 24/7 phone line on 1800 621 071.

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    Disclaimer
    The contents of this article are considered accurate as at the date of publication. The information contained in this article does not constitute legal advice and is of a general nature only. Readers should seek legal advice about their specific circumstances. 

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