Attractive site purchase prices mean developers are branching out to different markets to maximise profits, but there are traps for those who come north to Queensland.
Many developers not familiar with Queensland legislation can fall foul of compliance issues that arise from unique state legislation.
One of those compliance issues is the obligation to disclose information to the buyer by way of the sales information. Section 213 of the Queensland Body Corporate Community Management Act states:
“Before a contract is entered into by a person (the seller) with another person (the buyer) for the sale to the buyer of a proposed lot, the seller must give the buyer a disclosure statement.”
A disclosure statement must identify the proposed lot and be accompanied by a disclosure plan for the proposed lot. It must also state the date by which the seller must settle the contract for the sale of the proposed lot. The amount of annual contributions reasonably expected to be payable to the body corporate by the owner of the proposed lot must also be stated.
Disclosure statements must also include, for any engagement of a person as a body corporate manager or service contractor for the scheme proposed to be entered into after the establishment of the scheme, or proposed to be continued or entered into after the scheme is changed:
- the terms of the engagement
- the estimated cost of the engagement to the body corporate
- the proportion of the cost to be borne by the owner of the proposed lot.
For any authorisation of a person as a letting agent for the scheme proposed to be given after the establishment of the scheme, or proposed to be continued or given after the scheme is changed, the disclosure statement must include the terms of the authorisation.
Other items which must be included in or accompany the disclosure statement are:
- details of all body corporate assets proposed to be acquired by the body corporate after the establishment or change of the scheme
- the proposed community management statement
Statements must also identify the regulation module proposed to apply to the scheme, and include any other matters prescribed under the regulation module applying to the scheme.
In addition to content requirements, the disclosure statement must be signed by the seller and be substantially complete. If the contract has not already been settled, the buyer may terminate the contract if the seller has not complied with subsection (1). A seller does not fail to comply with subsection (1) merely because the disclosure statement, although substantially complete as at the day the contract is entered into, contains inaccuracies.
These are among the tightest legislative requirements out of all the Australian states. The purpose of these requirements is geared to protect the buyer, by giving them all information to enter into a sales agreement. However the tight legislative requirements in Queensland also provide protection to the Developer for settlements, as if the disclosure information is followed, then it would be very difficult for any prospective buyer to terminate a sales agreement.
Some interstate developers venturing into the Queensland market naturally tend to want to continue with business as usual, which can lead to delays when meeting sales launch deadlines. This is because section 213 deals with items such as any property agreements, meaning matters such as utilities, administration, security, pay TV services must be disclosed in the sales documents. In other states, these do not normally come into consideration until the building is nearing completion. Southern Developers can be reluctant to commit to agreements so far out from the completion of the development, and would rather work in with the prospective purchasers and their preferences, which is where interstate practices can come unstuck.
There is a greater need in Queensland to engage consultants earlier in the development process, allowing interrogation of the project cost implications to ensure all relevant documentation is received by the development timelines. Any Developer entering a different market should engage professional consultants conversant with the legislation in those markets. Utilising a valued or loyal southern consultant does not mean they will be beneficial or efficient if they are not schooled in the market of operation.
If you are looking for developer advice on Queensland, talk to SSKB. We can provide you with expert industry consultancy to ensure any business in a new state is undertaken with full awareness of any legislative requirements.