Property Law Bill - How is Local Government Impacted?

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Published by Preston Law on 04/04/2023

The Property Law Bill 2023 (“the Bill”) was introduced to Queensland Parliament on 23 February 2023 in response to a broad-scale review of the Property Law Act 1974, the almost half-century old piece of legislation that has a key impact on property transactions, including leases, throughout the State.

The Bill is part of a modernisation effort in the property law space and proposes to repeal the 1974 Act and replace it with a new framework.  It comes in response to a years-long reform effort and adopts many of the recommendations in a 2017 Queensland University of Technology Research Centre report.

As confronting as a wholescale review of the 1974 Act might sound to those working in the property law space, the changes proposed by the Bill don’t rip up the playbook altogether.  There are, however, some key modifications that will affect particular property dealings.

This blog will consider some of those changes from the perspective of local governments, who will be particularly familiar with the 1974 Act in leasing matters.  However, the Bill looks to change other features of Queensland property law and its reach goes well beyond leasing.

The below is not an exhaustive list of all of the important changes, but reflects some key ones to be aware about:

  • An electronic world – in 1974, there was obviously no such thing as e-conveyancing, electronic signing, electronic counterpart documents and service of documents electronically. The Bill creates a clearer legal framework around those matters.

The express possibility of electronically serving documents, including Notices to Remedy Breach and Notices to terminate leases, is an important feature of the Bill.

  • Seller disclosure scheme – a key aspect of the Bill is the introduction of a detailed seller disclosure scheme for property transactions. This scheme cannot be contracted out.
  • Standard terms – the Bill proposes to create a set of “standard terms” that are to be implied into every lease. These are listed in Schedule 1 of the Bill, and include:
  • a requirement to pay rent, taxes, rates and other assessments;
  • maintenance obligations;
  • provisions about rent being abated if the premises is damaged or destroyed;
  • particular prohibited activities;
  • powers of inspection for the lessor; and
  • provisions about the removal of lessee’s fixtures at the end of the lease, and what happens if the fixtures are not removed.

However, section 139(2)(b) of the Bill confirms that parties can “contract out” of the standard terms.

  • Relief against forfeiture – the Bill confirms that the relief against forfeiture provisions – including those sections that require Notices to Remedy Breach to be issued – do not apply to leases of housing under the Housing Act 2003, or residential tenancies under the Residential Tenancies and Rooming Accommodation Act 2008 (among other leases).
  • Notices to Remedy Breach – if the Bill is enacted, Notices to Remedy Breach will need to be issued to a range of different parties, including mortgagees, receivers, guarantors, sublessees and previous lessees where the lease has been assigned. These parties also have standing to apply to the Supreme Court for relief against forfeiture (ie the decision to terminate a lease).  However, the lessor’s obligation to serve these additional parties only applies to the extent their name and address is known to the lessor.
  • Options to Renew – the Bill contains, at section 164, a specific provision about the circumstances in which a lessor may refuse to renew or extend the term of a lease that contains an option. Specifically, it requires a breach notice to first be provided in a particular form outlining the breaches that form the basis of the lessor’s failure to renew the lease, which must be issued within a particular time of the option notice being given.  A breach notice issued in this way can be appealed to the Supreme Court.

The language used in proposed new section 164 reflects a more streamlined and “plain English” approach to what is contained in section 128 of the 1974 Act.

  • Liability for breaches of assignees – section 144 deals with leases that are assigned by a lessee to another person, and that first assignee assigns the lease to a second assignee. Section 144(2) confirms that the lessee and any guarantor is released from liability to the lessor for a breach of the lease by a second assignee, despite any agreement to the contrary.
  • Right to support – the Bill confirms that landowners have duties to one another in circumstances where one parcel of land “supports” other land (including any structures, subsoil or reclaimed land). That duty requires the owners not to do anything that adversely impacts that support.  From a local government perspective, this will be subject to the provisions in the Civil Liability Act 2003 that deal specifically with the negligence of public authorities.  The parties can also reach agreements that exclude or modify this duty (for example, under the terms of an easement).

The language in the Bill is a clearer expression of what is contained in section 179 of the 1974 Act.

  • Statutory rights of user – the Bill contains provisions, like the 1974 Act, about the Supreme Court’s power to impose a statutory right of use – effectively, a right to use land where a formal right such as an easement does not exist.

However, the provisions in the Bill contain some more detail than the 1974 Act to add clarity around how the Court exercises this power, including a requirement that the power is exercised consistently with the Planning Act 2016.

  • Encroachments – the Bill confirms that compensation orders about encroachments are to be determined based on market value, not unimproved capital value, and broadens the Court’s discretion to make orders about land required for access and curtilage.
  • The limitation period to enforce deeds – under the Limitation of Action Act 1974, parties had 12 years to enforce actions under deeds (the Limitations Act used the very old legal language of “speciality” to describe a deed). The Bill amends this and reduces the limitation period to 6 years for deeds entered into after the Bill commences.  This removes a key legal distinction between “agreements” and “deeds”.
  • Guarantees and Indemnities – the new Bill says that in order for guarantees and indemnities to be enforceable, they must be in writing. The 1974 Act only has this requirement for guarantees.
  • Enforcing rights in leases after transfer – the Bill clarifies the circumstances in which terms and conditions of leases are enforceable after the lease is assigned or transferred.
  • Plain English – anyone who has had to work their way through the 1974 Act is well aware of the clunky legalese throughout it! The Bill is a more modern and easier to understand piece of legislation that irons out some of these issues.

What happens to dealings entered into before the Bill?

Part 18 of the Bill contains a number of transitional provisions about dealings before the Bill. The Bill will apply to existing arrangements to the extent provided for in the Bill (and may, in certain circumstances, override any agreement reached by the parties), and so local governments should just be aware of those requirements to the extent there might be any inconsistency between their arrangement and the Bill.

We also recommend lessors review template documents and standard terms documents to confirm that the templates comply with the Bill (once it is enacted). 

Timing for the Bill

The Bill has been referred to the Legal Affairs and Safety Committee of Queensland Parliament, in order to report to Parliament about the Bill by 14 April 2023.  The report is expected to be considered by Parliament ahead of it being adopted, which could be as early as the Parliamentary sitting weeks in late April or May.

However, the Committee process could result in delays to the Bill, as the Committee’s recommendations and comments are considered further.

In the meantime, the 1974 Act still applies, but affected parties should still consider the impacts of the Bill, particularly on template and standard terms documents that might be used for leasing.

For further advice, please contact our dedicated Government and Property Team.

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