What do you need to disclose when selling your property?

Selling your home or investment property can be an overwhelming and daunting process at the best of times, but if your property has a few, let’s say, issues, then this process can be even more stressful.

Your real estate agent is required to operate in your best interest and sell your home at the best possible price, but they are also legally required to share material facts that are relevant to the sale of the property based on the information you give them.

No matter which state or territory you live in, let’s take a look at some of the key things you have to disclose.

1.    Pre-contractual Disclosure Obligations

Under the common law, you’re responsible for disclosing defects in your property title to potential buyers before the sales contract is drawn up. In Australia, these mainly refer to four aspects relating to defects or restraints in the property title.

•    Easements

Easements give someone the right to use the land for a specific purpose, even if they’re not the land owner. Examples include a shared driveway with a neighbour or access rights to water and electrical authorities. 

•    Covenants

Covenants are an obligation that require a property owner to abide by certain rules that may affect the use and value of your land. An example could be a requirement that street landscaping or home-front finishes be maintained to an agreed finish and quality.

•    Zoning

The legislation can vary from state to state when it comes to zoning. For example, you’re supposed to disclose if your property is in a flood zone or if it is in a bushfire-prone zone. Did you know, that in Tasmania you must also disclose if there are graves on your land!

•    Leases

Should a property remain under a rental agreement after settlement, this lease needs to be disclosed to prospective buyers.

It’s not a bad idea to hire a solicitor or conveyancer who can help you with the legislation for your state and your duty of disclosure within your contract.

2.    Building Consent

Made some renovations to your property? You’ll need to provide the necessary documentation (code compliance or building consent certificates) to show all works are up-to-date and approved.

If neighbouring properties have applied for any permits for works to fencing, trees or buildings that affect your property, it’s a good idea to tell the buyer your position on whether you gave or withheld consent. This way, they know exactly where they stand in the event of any dispute.

Before repairs and renovations are undertaken, sellers should make sure that the contractors they use are registered to do business in their state, and that they do quality work. Real estate agents will be able to recommend contractors with a good track record, but who do not charge an arm and a leg for the labour or materials.

3.    Property Defects

Even though many buyers organise a building inspection before putting in an offer, most states require a seller to disclose issues such as structural problems, damp, insect infestation or fixtures and appliances that don’t work.
In some unfortunate scenarios, vendors may be liable to complete these repairs before the sale goes through, should they not have disclosed them upfront.

4.    Asbestos

The dangers of asbestos have truly come into the spotlight over the past few years. This material, which was previously used in the construction industry very often, holds significant health hazards for people, and can lead to serious conditions like asbestosis, mesothelioma, and lung cancer. This happens when the asbestos fibres aren’t broken down in the body and are lodged in the lungs or digestive tract.
It makes sense, then, that one of the most common disclosure requirements pertains to asbestos. In many states, sellers are legally required to disclose it if their property has, could have, or could have had asbestos.

5.    Sensitive Issues

Some states have imposed stricter requirements around declarations where a property has been the site of a murder, vicious crime, or accident, as these may affect buyers’ perceptions of the property and, as a result, its value.

A property previously used for illegal drug manufacturing also needs to be declared in most states, along with proof of the required rehabilitation to minimise any potential health impacts.

What happens if something isn’t disclosed?

If you want to avoid trouble down the track, it pays to be honest when it comes to disclosures, and not just for the sake of being ethical. There may be the option to fix problems before your property goes on the market or in turn just be honest to buyers and let them factor any issues into their decision-making process.

It’s just not worth trying to hide something that should have been disclosed. At worst, you risk jail and fines in the tens of thousands, depending on which state or territory the property is in. At best, you could lose your buyer. In between, there are a range of penalties and fines that aren’t worth the risk.