Queensland Property Law Act 2023 Changes for Mortgages & Secured Lending from 1 August 2025

Introduction

The commencement of the new Property Law Act 2023 (Qld) (‘PLA‘) on 1 August 2025 introduced significant changes to Queensland property law, officially replacing the Property Law Act 1974 (Qld). These reforms now impose strict statutory duties on private lenders, non-bank finance companies, and property developers handling a mortgage, lease, instalment payment, or instalment contract.

Private credit funds and lenders must adapt their settlement workflows and loan documents to comply with these updated enforcement procedures and default notice periods. This article explains the key changes affecting secured lending and the mandatory disclosure regime for buyers and sellers so you can update your internal precedents and minimise legal risk.

Interactive Tool: Check Your New Mortgage Enforcement & Seller Disclosure Obligations

Essential Updates to Mortgage Enforcement & Default Notices for Private Lenders

New 30-Day Notice Periods for Remedying Defaults

Under Section 114 of the PLA, private lenders must follow a strict procedure before exercising a power of sale over a mortgaged property. Following a default, the lender must give the mortgagor a notice that:

• Clearly states the nature of the default; and
• Requires it to be remedied within 30 days.

The power of sale can only be exercised if the mortgagor fails to remedy the default within this 30-day window. This provision applies regardless of any term in the mortgage agreement to the contrary, ensuring borrowers have a clear opportunity to rectify the situation before enforcement action escalates.

Relief Against Accelerated Sums & Overdue Principal

The PLA introduces important protections concerning accelerated payments and overdue principal amounts. Under Section 130, if a default triggers an acceleration clause making the entire principal sum due, the mortgagor can prevent the acceleration before enforcement proceedings start by:

• Paying the outstanding instalment or interest amount, plus any reasonable expenses incurred by the lender due to the default; or
• Performing the specific obligation or covenant that was breached.

A mortgagor can also apply to the court for relief against the payment of an accelerated sum.

Additionally, Section 131 addresses situations where a mortgage term has expired, but the lender has continued to accept interest payments on the outstanding principal for at least three months. In such cases, the lender cannot demand repayment of the principal amount without first giving the mortgagor at least three months’ notice of their intention to do so.

Strict Mortgagee Sale Sequencing & Risk Controls for Non-Bank Finance Companies

Mandatory Duties to Sell at Market Value & Maintain Property

When a mortgagee exercises a power of sale, Section 116 of the PLA requires them to take reasonable care to ensure the property is sold at its market value.

For certain mortgages defined as “prescribed mortgages” by regulation, Section 116 imposes additional specific obligations. Unless there is a reasonable excuse, the mortgagee must:

• Adequately advertise the sale to attract a wide range of potential buyers;
• Obtain reliable evidence of the property’s value, such as a formal valuation;
• Maintain the property in a reasonable condition, which may involve undertaking necessary repairs; and
• Sell the property by auction, unless another method of sale is more appropriate.

Importantly, these duties cannot be contracted out of, and failure to comply for a prescribed mortgage can result in a maximum penalty of 200 penalty units. Furthermore, the mortgagee must provide the mortgagor with a notice in the approved form about the sale within 28 days of its completion.

Managing the Application of Sale Proceeds

Under Section 118 of the PLA, the mortgagee must hold sale proceeds in trust and apply them in a specific statutory order:

1. Sale Expenses: First, all reasonable expenses incurred in selling the property are paid.
2. Mortgage Debts: Next, the funds are used to pay the principal, interest, and any other amounts owing under the mortgage. If there is more than one mortgage on the property, they are paid in order of their priority.
3. Surplus to Owner: Finally, any remaining balance is paid to the owner of the property.

A special rule applies if the property sold was disclaimed, for instance, by a trustee in bankruptcy. In such cases, Section 118 directs the mortgagee to pay the balance of the proceeds into court rather than to the property owner.

Adapting Loan Documents & Mortgage Precedents for Australian Private Credit Funds

Incorporating Implied Powers & Mortgagor Obligations

The PLA introduces statutory terms that are automatically included in mortgage documents unless expressly excluded. Under Section 113, mortgagees are granted several implied powers, allowing a lender to:

• sell the mortgaged property;
• insure the property against loss or damage;
• appoint a receiver for the property;
• grant an easement, right, or privilege in relation to the property;
• cut and sell timber if the mortgagee is in possession; and
• sell any mines or minerals separate from the surface of the land.

If a mortgagee exercises the power to insure the property, Section 113 states that the insurance premiums become a charge on the property carrying the same priority and interest rate as the original mortgage debt.

Conversely, Section 128 outlines the implied obligations of a mortgagor, requiring the borrower to:

• pay the principal and interest as specified in the mortgage terms;
• keep buildings and other improvements on the land in good and substantial repair; and
• allow the mortgagee to enter the land at convenient times to inspect the state of repair.

Private credit funds should review their precedents with lawyers for private credit funds to decide whether to rely on these statutory provisions or to insert custom clauses that better suit their specific lending requirements.

Managing Variations & Further Advances

Section 110 of the PLA allows for the variation of a registered mortgage through a separate instrument of variation to make changes such as:

• increasing or reducing the interest rate;
• increasing or reducing the amount secured by the mortgage;
• shortening, extending, or renewing the mortgage term; and
• varying any other term of the mortgage.

For lending additional funds, Section 126 sets out the rules for when a further advance maintains the same priority as the original mortgage over any subsequent mortgages. This priority is kept only if:

• the subsequent mortgagee agrees to the further advance;
• the prior mortgagee had no actual notice of the subsequent mortgage at the time the further advance was made; or
• the terms of the original mortgage required the prior mortgagee to make the further advance.

Crucially, Section 126 clarifies that the registration of a subsequent mortgage does not, by itself, constitute actual notice. This provision protects lenders who provide additional funding unaware of new encumbrances on the property.

Lender Settlement Workflows & Electronic Conveyancing Adjustments

Electronic Mortgages & E-Conveyancing Settlement Delays

Under Section 112 of the PLA, if a mortgage is lodged electronically, a document held by the mortgagee granting the mortgage on the same terms can be relied on as evidence, even if signed electronically.

The Act also provides statutory protections for parties when settlement is disrupted by system outages or other unforeseen events:

• Inoperative Land Registry Computers: Under Section 79, if a buyer cannot verify the seller’s title on the settlement day because the land registry’s computers are down, time ceases to be of the essence. Either party can issue a notice to complete once the system is operational again.
• E-Conveyancing System Failures: For delays caused by inoperative computers at entities like a financial institution or an Electronic Lodgment Network (ELN), Section 80 automatically moves the settlement day to the next business day, though time remains of the essence.
• Adverse Events: Under Section 81, if a party cannot settle due to an “adverse event,” such as a cyclone, flood, or public health emergency, time stops being of the essence, and the affected party must arrange a new settlement time once the event has passed.

Handling Mortgage Transfers Instead of Discharges

Under Section 132 of the PLA, a mortgagor entitled to a discharge can instead require the mortgagee to transfer the mortgage to a different person.

This right is subject to specific rules regarding multiple parties and possession:

• Subsequent mortgagees: This right extends to subsequent mortgagees, meaning a subsequent mortgagee can require the first mortgagee to transfer the mortgage.
• Conflicting requests: Should there be conflicting requests from the mortgagor and a subsequent mortgagee, the request from the subsequent mortgagee prevails.
• Mortgagee in possession: This right cannot be exercised if the mortgagee is in possession of the mortgaged property.

Seller Disclosure & Leasing Impacts on Secured Lending for Property Developers

Managing the Mandatory Seller Disclosure Regime

Under Section 99 of the PLA, property developers must follow a mandatory seller disclosure regime, providing buyers with comprehensive documents before a contract for the sale of a lot is signed, including:

• a disclosure statement in the approved form; and
• all applicable prescribed certificates.

Section 98 prohibits contracting out of these requirements. Failure to comply has significant consequences: under Section 104, the buyer has the right to terminate the contract at any time before settlement if a seller fails to provide the required documents or provides information that is inaccurate or incomplete regarding a material matter. This termination right introduces uncertainty for off-the-plan sales, potentially impacting a lender’s confidence in the presale contracts underpinning their security.

Protecting Mortgagee Interests During Tenant Defaults

The PLA strengthens the position of mortgagees when a tenant defaults on a lease. Under Section 154, a lessor must give a copy of any notice to remedy breach to all “designated persons.” Section 152 defines a “designated person” to include a mortgagee with a registered mortgage over the lease, ensuring lenders are promptly informed to assess the risk to their security.

Furthermore, Section 160 allows a designated person, including a mortgagee, to apply to the court for relief against the forfeiture of the lease. This gives the lender legal standing to intervene and potentially remedy the tenant’s breach or take other steps to preserve the lease, thereby protecting the income stream and the value of their security interest.

Conclusion

The PLA introduces significant reforms for private lenders and property developers, establishing new rules for mortgage enforcement, mortgagee sales, and electronic settlements. These changes also create a mandatory seller disclosure regime and enhance protections for mortgagees in leasing matters, requiring updates to loan documents and settlement workflows before the 1 August 2025 commencement.

To prepare for these changes, it is important to review and update your lending documents and procedures to align with the new requirements. Contact our private lending lawyers at GRM Law today for assistance in adapting your operations to the PLA and ensuring your interests are protected.

Frequently Asked Questions

Disclaimer: This is general information only and is not legal advice. For advice on your circumstances, contact GRM LAW.