Understanding non-disclosure in real estate: What it is and how to avoid it
In real estate, transparency is key to a successful sale. Under the Property Law Act, sellers are required to fully disclose all relevant information about their property to potential buyers. Failing to do so can lead to serious consequences, including contract termination or legal action. But what exactly does non-disclosure mean, and how can sellers avoid it?
What is Non-Disclosure?
Non-disclosure refers to the failure to provide complete and accurate information about a property during the sales process. Sellers are legally obligated to share any material facts—details that could influence a buyer’s decision to purchase. These facts encompass a wide range of information, including:
Body corporate details
Gas and water allocations
Easements and caveats
Smoke alarms and safety switches
Pool safety certificates
Material Facts to Disclose
Material facts go beyond the basics of property features. Sellers must disclose any issues or characteristics that could affect the property’s value or desirability. For example, these could include:
Risks of flooding or contamination
A history of the property being used for illegal activities, such as drug manufacturing
Whether the property was the site of a serious crime
Additionally, it’s crucial that all information presented to buyers is accurate. This includes verifying council approvals for structures like sheds, renovations, or any modifications to the property.
The Risks of Non-Disclosure
If any undisclosed issues are discovered during the contract process or after settlement, buyers may have the right to cancel the contract. In some cases, they may also seek compensation for damages caused by the lack of disclosure. To avoid this, sellers should be proactive and transparent in sharing all relevant details.
How to Avoid Non-Disclosure
To protect both parties and ensure a smooth transaction, sellers should:
Be thorough: Review all aspects of the property, from legal documents to any modifications or repairs, to ensure that nothing is left out.
Be transparent: If there is any doubt about whether a detail is relevant, it’s best to disclose it. Full transparency builds trust and minimises the risk of disputes.
Ensure accuracy: Double-check all information provided to buyers, especially regarding council approvals and legal compliance.
By following these guidelines, sellers can help ensure a fair, transparent, and legally compliant sales process, protecting themselves from potential legal and financial repercussions while offering buyers peace of mind.
If you have any questions about disclosure in relation to real estate transactions, please reach out.
