Disclosure obligations for Queensland property developers: Off-the-plan sales explained

Developers have long been subject to disclosure obligations when selling property ‘off-the-plan’. However, the introduction of Queensland’s new seller disclosure regime has highlighted important gaps in how disclosure requirements apply to proposed lots within developments.

For developers, understanding which disclosure regime applies, and when, is critical. Getting this wrong can result in avoidable delays, additional costs and buyer termination rights. Obtaining the right legal advice early can help ensure compliance and support smoother project delivery.

Disclosure obligations for body corporate developments in Queensland

It is increasingly common for property in Queensland to be developed as part of a body corporate, whether that is an apartment building, townhouses, a duplex or some other type of complex with shared facilities such as a driveway. The developer can choose the regulation modules that apply to the body corporate, depending on the size and nature of the development.

When selling a proposed lot that will form part of a body corporate, section 213 of the Body Corporate and Community Management Act 1997 (Qld) (BCCMA) requires a seller to provide certain information to a buyer before entering into an off-the-plan contract.

The disclosure statement must include details of the following:

• identification of the proposed lot being sold;
• the sunset date applicable to the contract;
• estimates of the first year’s annual contributions for body corporate levies;
• the terms of engagement and expected costs of engaging the body corporate manager or contractors;
• the terms of authorisation for management rights granted;
• a list of the body corporate assets (such as gym equipment, furniture, etc); and
• the regulation module will apply to the scheme.

There are also a number of documents that need to accompany the disclosure statement, including:

• a disclosure plan that complies with section 213AA of the BCCMA;
• the body corporate management agreement;
• any other contracts the body corporate will enter into;
• the proposed community management statement (CMS);
• the proposed building management statement (BMS) if applicable; and
• any other documents or information prescribed under the relevant regulation module.

Disclosure requirements for vacant land subdivisions

Vacant land subdivisions are commonly used to subdivide land into smaller parcels for the sale of house and land packages. Larger subdivisions often require the construction of new roads and other infrastructure.

Before entering into an off-the-plan contract to sell a proposed lot that is part of a vacant land subdivision, section 10 of the Land Sales Act 1984 (Qld) (LSA) requires a seller to provide the buyer with:

• a disclosure statement setting out:
  • the sunset date applicable to the contract; and
  • whether a development approval has been granted for reconfiguration of the lot or for any operational works; and
• a disclosure plan for the proposed lot that complies with section 11 of the LSA.

Where a draft survey plan has already been approved by Council, this may be provided in lieu of the disclosure statement to satisfy the seller’s obligations under section 10 of the LSA.

At least 14 days before settlement, section 14 of the LSA requires the seller to also provide the buyer with:

• a copy of the registered survey plan; and
• a statement from the seller’s surveyor confirming that there are no differences between the registered plan and the disclosure plan (if provided).

When disclosure is not required for land sales in Queensland

The LSA does not apply to the sale of a proposed lot where:

• the land subdivision will create five lots or fewer; and
• no body corporate is being formed.

If a seller wants to enter into off-the-plan contracts for a land subdivision meeting the above characteristics, no disclosure is required to be provided before the survey plan is registered. This exception in section 3 of the LSA means that smaller projects can be sold off-the-plan by the developer without incurring the additional legal and survey costs associated with disclosure.

However, the contracts will still need to be properly prepared to ensure settlement is conditional upon plan registration, while giving the seller flexibility to finalise development approvals and complete any operational works necessary to create the lots.

Further disclosure statements: Changes, errors and buyer termination rights

A seller may issue a further statement to provide updated disclosure to the buyer where there are inaccuracies in the original disclosure, or to advise the buyer of changes that have occurred during the development (for both body corporate developments and land subdivisions). However, if information or documents were omitted from the original disclosure statement, the further statement cannot fix that omission.

The further statement must be issued to buyers at least 21 days before settlement. If a buyer is materially prejudiced by the change, they may be entitled to terminate the contract.

Disclosure obligations after plan registration

The seller disclosure regime under the Property Law Act 2023 (Qld) (PLA) does not apply to off-the-plan sales.

However, once the plan has been registered with the Titles Office, any unsold lots will fall under the seller disclosure regime and will need a Form 2 Seller Disclosure Statement and prescribed certificates to be provided to the buyer before entering into any sale contracts post-registration. The seller cannot rely on BCCMA or LSA disclosure previously prepared for these sales.

It is important to consider the timing of plan registration, the issuing of further statements and ongoing disclosure obligations when selling lots as part of a property development. In particular, developers should consider the following issues:

• Change of buyer or rescission rights
  Developers will need to consider if they will accept requests from buyers to rescind the contract or to substitute the buying entity after registration of the plan. If seller disclosure is not done correctly, buyers may be able to terminate the contract that would not otherwise have existed if the original contract remained on foot. The terms of any rescission should be carefully considered.
• Further disclosure statements
  Buyers may have a termination right when further statements are issued, and settlement may be delayed. Developers should consider providing further disclosure well in advance of plan registration to allow time to resell any lots while they are still considered ‘proposed lots’.
• Title searches
  The registration confirmation statement (RCS) issued by the Titles Office cannot be used as a prescribed certificate. As a result, title searches will need to be obtained for all unsold lots.
• Statutory encumbrances
  Details of statutory encumbrances (such as pipes or NBN infrastructure) are required to be disclosed in the Form 2 Seller Disclosure Statement. If new infrastructure has been constructed as part of the development, plans may not be available from the relevant authority. In these circumstances, developers may need to disclose as-built plans to show the approximate locations of infrastructure servicing the lot, which will be particularly relevant for land sales.

If disclosure is not done correctly, it can delay sales and create additional cost which may not have been budgeted for in the development.

Why Queensland developers should seek strategic legal advice

The cost of getting compliance wrong can be significant in off-the-plan sales and could result in a buyer terminating the contract.

Macpherson Kelley’s Queensland property lawyers regularly work with developers and have in-depth knowledge of the legislative frameworks governing off-the-plan sales. We assist clients to identify and comply with the disclosure obligations applicable to their development.

Please contact our team to discuss how we can help settle your next development.

The information contained in this article is general in nature and cannot be relied on as legal advice nor does it create an engagement. Please contact one of our lawyers listed above for advice about your specific situation.