Is it the Agents Duty of Disclosure to notify a prospective buyer of any dark history associated with the property? NSW Licenced Conveyancer Rachel Godden, discusses any ramifications that may arise when you are the agent selling the property.
We have previously discussed the duty of disclosure for a seller of real property in both Qld and NSW under the relevant legislation. In both states, sellers are required to disclose any relevant matters which may affect the title to the property. The legislation in both states is quite specific in relation to what must be disclosed. Failure to comply with the legislation usually allows the buyers to terminate the Contract and can even lead to prosecutions against the sellers and/or their agents. However, this relates to the title of the property and does not cover disclosing some event or history of the property that might affect a buyer’s decision about whether to purchase the property.
What is the position with disclosing a previous dark history associated with the property? Are you obliged to disclose to a prospective purchaser the fact that a violent murder has occurred in the property or alternatively that there has been a suicide on the premises? Generally speaking, there is no legal requirement to disclose such information in the relevant property law legislation in either Qld or NSW.
However, real estate agents need to be aware that if they fail to disclose a “material fact” to a prospective purchaser which might mislead them into purchasing a property, a court could set aside the Contract and award damages in favour of the purchasers. Agents could also be prosecuted for breaching relevant consumer protection laws. There are various state and federal laws which could be relied upon by purchasers to substantiate claims of this nature and these will vary depending upon the circumstances and which state you are in. A good example of this was the Sef Gonzales case where the agents were fined $10,000.00 for failing to disclose a triple murder on the premises. The purchasers also had the contract rescinded.
Agents need to be extremely careful when they know of some history associated with the property which might lead the purchasers to decide not to go ahead or the history affects the value of the property in a fundamental way. Perhaps the best policy in these circumstances is to disclose the issue to any prospective buyers. If you do not disclose the history, you risk the prospect of being prosecuted for this conduct and possibly being joined in court proceedings issued by the purchasers if they wish to overturn the Contract.
Agents should be aware that it is not just the violent history of a property which must be disclosed. The duty of disclosure relates to any issue which is false, misleading or deceptive. The current test is whether a “material fact” should have been disclosed to the buyers, which may have led them to not proceed. This applies equally to agents who remain silent about certain issues.
If you are unsure of any circumstances which you should be disclosing to prospective purchasers or are having problems with your vendors as to whether something should be disclosed, please contact contact our Property and Commercial Department Manager, Jess Kimpton on direct line 07 5506 8402, email email@example.com.