It is proposed that the Property Law Bill 2023 will replace the current Property Law Act 1974 (PLA). So what does that mean in regards property ? Below are a few takeaways.
What’s new under covenants?
What are your liabilities as a lessor?
Who is a designated person? And why lessors and lessees should know.
What are the changes to various notices?
Covenants
The Bill updates sections 117 and 118 PLA to avoid uncertainties as to the enforceability of covenants relating to those who ‘touch and concern’ the land. All rights and obligations contained in lease documents will be enforceable after assignment or transfer of the reversion of the lease except where the:
(a) lease expressly provides the term is personal; or
(b) lease expressly excludes the term from assignment or transfer of the reversion of the lease; or
(c) in the case of an assignment of lease, the party assigning the lease expressly agrees with the transferee that the benefit of the term accruing prior to the assignment remains with the party assigning, or the lessor consents to the party assigning the lease retaining the benefit of the term; or
(d) in the case of a transfer of the reversion of the lease, the party transferring the reversion expressly agrees with the transferee that the benefit of the term accruing prior to the transfer remains with the party transferring the reversion of the lease.
A covenant that restricts the use of the land also applies to the owner of the land (in the case of transfer of the reversion of the lease) and to the occupier of the land (in the case of an assignment of the lease).
Lessor Liability
The Bill also codifies the existing position whereby the lessor remains liable for a breach of the term of the lease committed by the lessor prior to transfer of the reversion of the lease.
Under section 121 PLA, a lessee may request the lessor consent to an assignment of (or other dealing with) the lease or leased premises, and the lessor must not unreasonably withhold consent. The Bill explains this provision:
(a) the timeframe for a lessor to consider and decide a request for the assignment of lease is one month – so consistent with the Retail Shop Leases Act 1994;
(b) in the event the lessor fails to consent, the lessee may apply to the court – which has been given broad powers to make appropriate orders.
(c) the lessee must provide the information that is required under the lease, or further information the lessor considers is required so they can make a decision about the assignment.
Lessee Liability for Assignees
Under the common law, a lessee who assigns its interest in a lease may remain liable for a breach of the lease by an assignee (the first assignee and any subsequent assignees of the lease even where the lessee had no part in the assignment of the lease to subsequent assignee/s). The Bill releases the lessee and the lessee’s guarantor for any breaches of the lease by subsequent assignees. This change to the law applies despite any agreement to the contrary.
Relief Provisions
The Bill expressly states that the relief provisions (including relief against forfeiture) in the Bill do not apply to particular leases, including residential tenancies under the Residential Tenancies and Rooming Accommodation Act 2008.
Lessee Breaches and Notices to Remedy
Under section 124 PLA if a lessee has breached a lease, the lessor is unable to re-enter or forfeit the lease for a breach of term of the lease until a Notice to Remedy Breach has been served and the lessee has failed to remedy the breach. The Bill now requires a copy of the Notice to Remedy Breach to be given to’ designated persons’.
The lessor does not have to serve a Notice to Remedy Breach when the lessor reasonably believes that the lessee has given up possession of the land, but the Bill requires the lessor to serve notice of re-entry asap after they have re-entered the property.
Designated Persons
The definition of ‘Designated persons’ now includes mortgagees, receivers, guarantors and sublessees and the Bill and includes, in the case of assignment, any previous lessee or lessee’s guarantor who remains liable under the lease; anyone not released from liability on the assignment of the lease.
The notices can be served only if the designated person’s name and address are known to the lessor.
The designated persons are given the right to make a court application to seek relief from forfeiture.
Lessee, Prescribed Notice/s and Lease Renewal
The Bill clarifies that if a breach occurs after the notice of an ‘exercise of option’ is given, the lessor will have to send a further prescribed notice before refusing to honour the lessee’s option on the basis of the subsequent breach. The lessee can also apply to the court for relief against the loss of their option within one month of the 2nd prescribed notice.
The Bill also gives a designated person one month after the notice to make an application for relief from a refusal to renew (or extend a term, or sell the reversion, of the lease by the lessor). The provision does not entitle a lessee to relief where the lessee does not exercise their option in time.
Schedule 1 of the Bill contains Standard Terms of a lease and covers items such as payment of rent, taxes, rates; assignment; inspection rights, premises destruction; and lease breaches. The provisions in the Schedule may be altered or removed by contrary agreement and are subject to any other Act.
Many of the outdated covenants in the PLA including those relating to
- applying for and facilitating the transfer of a licence;
- cultivation of the property fence and keep up of fences;
- paint and paper the property;
- or paint the outside of the property,
have been omitted.
Legal update on the Proposed Property Law Bill 2023
The Property Law Bill (Qld) 2023 was introduced to Queensland Parliament on 23 February 2023 – The Scheme is a significant change to conveyancing in Queensland and it will be vital that people in the industry are familiar with it. The proposed bill is over 120 pages long so we’ve summarised some key points.
- E-Property Laws
- Instalment Contracts
- Land Lotto – are you entitled to land?
- Leases
- Mortgages
- Seller Disclosure Scheme
Please contact us if you have any questions in relation to this matter or if we can assist you with any other legal matter. We have offices across South East Queensland with the capability to work electronically through Queensland and Australia.
Call us on 1300 334 566 or email info@bcglaw.com.au and safeguard your interests every step of the way- We are your legal problem solvers.
