BEWARE of Instalment Contracts in QLD!

In this video we explain instalment contracts in Queensland: what triggers one, what rights the buyer gets, and why sellers and agents need to be careful. Updated for the Property Law Act 2023.

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Last updated 19 August 2026. Updated for the Property Law Act 2023. The whole of the Property Law Act 1974 was repealed on 1 August 2025 by section 237 of the new Act, and with it the old instalment contract rules in Part 6, Division 4 (sections 71 to 76). Instalment contracts are now governed by Part 7, Division 3 of the Property Law Act 2023, and five things changed. If you are working from pre-2025 advice, some of it is now wrong.

What is an instalment contract in QLD?

Section 89 defines it: a contract for the sale of land under which the buyer is bound to make one or more payments of the purchase price by instalment, other than a deposit, and is not entitled to receive a transfer of the title in exchange for those payments.

In plain English, the buyer pays down the price over time and does not get the title until the end. It changes the legal relationship between buyer and seller, and it hands the buyer a set of statutory protections that do not exist under an ordinary contract.

What turns a normal contract into an instalment contract?

Almost always the deposit. Section 87 says a deposit is a sum of not more than the prescribed percentage of the purchase price, payable in one or more amounts, and refundable to the buyer if the seller breaches the contract or does not fulfil a contingent condition.

The prescribed percentage is 10%, or 20% for a proposed lot. A proposed lot is broadly a lot that does not exist yet, the off the plan case, and it picks up proposed lots under the Land Sales Act 1984 and the Body Corporate and Community Management Act 1997. So there are two ways money stops being a deposit:

• The deposit exceeds 10% of the price (20% for a proposed lot). The excess is no longer a deposit, so it is an instalment.
• The deposit is not refundable if the seller breaches. It fails the definition regardless of size.

Failing the deposit test is not the end of the analysis. Once money is an instalment rather than a deposit, whether you actually have an instalment contract still turns on section 89, and where the buyer has an election, on the section 90 notice.

Watch the price reduction trap. If you hold a 10% deposit and the parties then agree to reduce the purchase price, the money you are holding can quietly become more than 10% of the new price, and the contract can become an instalment contract without anyone intending it. Our guide to deposits in QLD covers the mechanics.

Note also what section 87 excludes from being an instalment: an option fee, and amounts the buyer pays after the contract for maintenance, rent and outgoings, rates and taxes, interest on the price, or an extension of time.

Does the contract become an instalment contract automatically?

Not always, and this is the biggest change under the new Act.

Section 90 says that where a contract may, at the buyer’s election, be performed in a way that would constitute it an instalment contract, the contract is not an instalment contract unless and until the buyer gives the seller a notice electing to perform it that way.

So if the buyer is bound to pay by instalments, section 89 applies from the outset. But where the contract merely permits it, nothing happens until the buyer serves the notice. Note the limit of this. Section 90 only bites where the buyer has an election. It does not save you from the classic accident, an oversized or non refundable deposit, because there section 89 applies directly and there is no election to make. The practical effect cuts both ways: a buyer who assumes the protections are automatic may have none of them, and a seller who assumes that no notice means no instalment contract may be badly wrong.

What rights does the buyer get?

Four, and Division 3 applies despite any agreement to the contrary. The parties cannot contract out of them. Two carve outs are worth knowing: under section 88 the division does not bind the State, the Commonwealth or the other States, and it does not apply to a sale of land by the public trustee.

Section 91: a 30 day cure period. The seller cannot terminate for the buyer’s default in paying an instalment, or any other sum other than a deposit, until 30 days after giving the buyer a notice in the approved form. If the buyer pays within those 30 days, the seller’s right to terminate ends and the buyer is taken not to have been in default. Under an ordinary contract the seller could terminate and resell.

Section 92: no selling or mortgaging. The seller must not sell or mortgage the land without the buyer’s consent, and consent only counts if the seller first gave notice of the terms and the buyer then consented to those stated terms. Breach it and the contract is voidable by the buyer before settlement, and the buyer can recover the deposit and instalments as a debt.

Section 93: a statutory caveat. The buyer may lodge a caveat forbidding registration of any document affecting the land until settlement. It is taken to be lodged otherwise than under Part 7 Division 2 of the Land Title Act 1994, so it does not lapse the way an ordinary caveat does. See our explainer on caveats in Queensland.

Section 94: forcing the transfer. A buyer who is not in default may give the seller notice requiring transfer of the land on a stated day in exchange for the balance owing. The notice must make time of the essence and be given at least three months before that day.

What changed from the Property Law Act 1974?

Five things, if you are relying on older material.

1. The deposit test flipped. Under section 71 of the 1974 Act a deposit was money liable to be forfeited if the buyer breached. Under section 87 of the 2023 Act it is money refundable if the seller breaches or does not fulfil a contingent condition. Same 10% and 20% caps, different test, and it changes which contracts trip the wire.
2. The election requirement in section 90 is new. Where the buyer merely has the option to perform by instalments, nothing happens until the buyer serves notice.
3. The one third rule is gone, and it used to cut both ways. Under section 75 of the 1974 Act, once a third of the price was paid, the buyer could compel a transfer with a mortgage back to the seller, and the seller could compel the buyer to accept one. Section 94 replaces it with a buyer only right: not in default, three months notice, pay the balance. There is no one third threshold in the 2023 Act, and the seller has lost that tool entirely.
4. Extension fees, interest and outgoings are expressly not instalments. Section 87 now carves out option fees, maintenance, rent and outgoings, rates and taxes, interest on the purchase price, and payments for an extension of time. The 1974 Act had no such list, so charging a buyer to extend settlement carried a real argument that you had created an instalment contract. That argument is gone.
5. The offence is gone. Section 73 of the 1974 Act made a seller who sold or mortgaged without the buyer’s consent guilty of an offence, maximum 9 penalty units. Section 92 keeps the civil consequences, the contract is voidable and the buyer can recover what they paid, but there is no longer an offence.

Why should sellers and agents be careful?

Because the protections all run one way. A seller who becomes a party to an instalment contract without meaning to has given up the right to terminate quickly on default, the freedom to deal with their own title, and a clean exit if the buyer stops paying. They may also be sitting on a caveat they cannot easily remove.

If the property is mortgaged, the position gets worse. The existing lender is unlikely to permit the transfer contemplated by section 94, which sets the statutory scheme against the mortgage terms. That conflict is not one to discover after signing.

Sellers also still have to comply with the mandatory seller disclosure regime. Section 100 lists the exceptions and an instalment contract is not one of them, so the Form 2 and prescribed certificates must be given before the buyer signs.

What about contracts signed before 1 August 2025?

This is the question almost nobody is asking, and it matters because instalment contracts run for years.

When the drafter wanted to confine a new regime to new contracts, they said so. Section 251 of the Property Law Act 2023 does exactly that for seller disclosure: Part 7, Division 4 applies to a contract for the sale of a lot only if the contract was entered into after commencement, and where the contract arises from an option, only if the option was granted after commencement.

There is no equivalent provision for instalment contracts. Part 18 of the Act deals expressly with seller disclosure, leases, mortgages, easements and a long list of other areas. On Part 7, Division 3 it is silent.

What fills the gap is section 238 of the Property Law Act 2023, which preserves section 20 of the Acts Interpretation Act 1954. That saves a right, privilege or liability already acquired, accrued or incurred under the repealed Act, so whatever had already accrued to a party under the old rules is protected. How the new Division 3 sits over a pre August 2025 instalment contract going forward is a different question, and the Act does not answer it.

The practical point is simple. If you are in a vendor finance arrangement, or any other instalment contract signed before 1 August 2025 and still running, do not assume the rules you were advised about still govern it, and do not assume they do not. Have it looked at.

Where do instalment contracts actually come up?

Most often in vendor finance arrangements, where the seller finances the purchase and the buyer pays them off over years. That post covers the commercial side: stamp duty timing, land tax, capital gains tax and whether the seller needs a credit licence.

They also surface in long settlements with staged payments, deals restructured after a price reduction, and arrangements dressed up as rent to buy. If you are being offered a deferred completion structure, an option deed is often the cleaner way to do it.

Frequently asked questions

Are instalment contracts legal in Queensland?

Yes. They are lawful and governed by Part 7 Division 3 of the Property Law Act 2023. The division applies despite any agreement to the contrary, so the protections cannot be drafted away.

Is a deposit over 10% always an instalment contract?

The excess over the prescribed percentage is not a deposit, so it counts as an instalment. Whether the contract is an instalment contract then depends on section 89 and, where the buyer has an election, on the section 90 notice. The prescribed percentage is 10%, or 20% for a proposed lot.

Can a seller terminate an instalment contract if the buyer defaults?

Not immediately. Section 91 requires a notice in the approved form and a 30 day wait. If the buyer pays the outstanding amount within 30 days, the right to terminate ends and the buyer is treated as never having been in default.

Can the seller mortgage the property during an instalment contract?

Only with the buyer’s consent, and only after telling the buyer the terms of the proposed mortgage. Without that, the contract becomes voidable by the buyer before settlement and the buyer can recover what they have paid as a debt.

Does the one third rule still apply in QLD?

No. The one third threshold under the Property Law Act 1974 was not carried across. Section 94 of the Property Law Act 2023 lets a buyer who is not in default require a transfer on a stated day, with at least three months notice, in exchange for the balance of the purchase money.

Does the 2023 Act apply to an instalment contract signed before 1 August 2025?

The Property Law Act 2023 does not say. Section 251 of that Act expressly limits the new seller disclosure regime to contracts entered into after 1 August 2025, but there is no equivalent provision for instalment contracts. Section 238 preserves section 20 of the Acts Interpretation Act 1954, which saves rights already accrued under the Property Law Act 1974. Anyone with an instalment contract signed before commencement and still on foot should get advice rather than assume.

Should I sign an instalment contract?

Not without tailored advice. They carry real risks for sellers and real complexity for buyers, and the tax and disclosure consequences are easy to miss. Both sides need their own solicitor. Empire Legal never acts for both the buyer and the seller in the same transaction.