Disclose or not disclose? Material facts when buying a property

Imagine buying your dream home only to later find out it was illegally used to produce illicit drugs or that a murder was committed on the property.

This sad situation was possible in Victoria prior to 1 March 2020 where sellers of property weren’t required to reveal such details.

Since this change, legally a seller, and their real estate agent, must disclose a material fact to buyer. It is illegal to make a misleading statement or knowingly conceal a material fact. If a seller or their agent doesn’t disclose a known material fact, they commit a criminal offence.

There is no list of what is a material fact however from guidelines issued by the Consumer Affairs it is much broader than just a drug or murder house. It includes properties where:

  • There was termite infestation, combustible cladding, asbestos or contamination
  • There is a physical defect in the property such as faulty stumps causing cracks in the hose
  • Floods or bushfire impacted on the property
  • Pesticides were used at the property
  • There are restrictions on vehicle access
  • They are affected by neighbourhood issues like sinkholes or development proposals that would impact value.
  • Building work that was done without a permit or that was illegal
  • They were previously had hazardous materials used on it.

A seller is now required to disclose these material facts if:

  • The purchaser asks a specific question about the property to the vendor or their agent; or
  • The purchaser tells the seller or the agent what they plan to use the property for, and the material fact would be relevant to that. A good example is contamination. If the land being sold a former petrol station site with known contamination, and the purchaser plans to run a childcare centre, in my view the contamination should be disclosed.

So as a seller my advice to you is — honesty is the best policy. Prepare your vendor statement (section 32) comprehensively and, if asked a question by the buyer, answer it honestly. You should also tell estate agent about any material facts you know about.

As a buyer, my advice is to simply as the question — has anything material happened to the property?

At OFRM it is our procedure to inquire about material facts on every conveyance. Contact the Conveyancing team on 03 5445 1000.

ConveyancingLachlan EdwardsO'Farrell Robertson McMahonsection 32