Selling your home can be an overwhelming and daunting process at the best of times, but if you need to sell quickly or your property has a few, let’s say, issues, then this process can be even more stressful.
Selling a property under difficult circumstances often leads sellers to ask the question, ‘what do I have to disclose when selling a house?’ After all, you want a quick sale for the best price and disclosing issues with the buyer before they’ve had a chance to fall in love with the unique selling points of your home can potentially hinder the chances of this happening.
But not providing a vendor statement or sharing full information about the property could land you in hot water with the law.
Read on to find out exactly what you need to disclose to buyers when selling your house.
What Does Disclosure Mean and What is a Vendor Statement?
Disclosure in real estate is sharing information and facts about a property between the vendor and the buyer. This also includes information that wouldn’t ordinarily be known under normal circumstances.
In real estate, this information is often referred to as ‘Material Fact’ and is simply letting all parties know of information that can impact the buying or selling of property. Often this information is compiled into a document called a vendor statement.
Disclosing information about a property that could impact the decision making of a buyer is not just a courtesy, in most states and territories across Australia it’s the law. Under the Australian Consumer Law (ACL), both vendors and agents are legally obligated to disclose known information or material facts, that is important to a person when deciding whether or not to purchase a property. It is an offence to mislead or deceive parties to a contract… Even by omission.
What Type of Things Do I Need to Disclose?
Deciding what should be disclosed and what shouldn’t can be a bit of a grey area, especially for agents. On one hand the agent is required to operate in your best interest and sell your home at the best possible price, while on the other hand they are also legally required to share material facts that are relevant to the sale of the property.
So, do you have to disclose if the property has termite damage or asbestos when selling? Potentially, yes.
As a general guide, the following details are often considered material facts and as a vendor, you should consider disclosing this information in a vendor’s statement when selling your house.
- Building approvals
- Structures on the property that have not been approved by council
- Encumbrances or covenants that may impact future use or alterations to the property.
- Information about a pool on the property and if there is or is not a pool certificate available.
- Information about Body Corporates (particularly relevant for units and townhouses). This includes the body corporate costs, what the body corporate covers and any outstanding body corporate issues.
- Current tenancy agreements or leases
- Any tree protection orders
- Information about contaminated land or environment orders on the property
- Any defects or hazards not present to the naked eye - This can include any known termite damage or asbestos
- An accurate sale price
- Information about the properties history that could impact the sale or value of the home… Such as a violent crime or death at the property or if illegal drug activity took place at the property.
What Type of Things Don’t I Need to Disclose?
Of course, as a seller, no matter what situation that has lead you to sell your property, you do want to try to be as upfront and honest as you can with potential buyers. This allows for more chance of the sale of your home to run smoothly.
However, there is a fine line between disclosing what is required and sharing way too much. After all, at the end of the day, you want to sell your home for the best possible price and sharing information that is not really relevant to the buyer at the end of the day, may not help you reach that end goal.
Details that are generally not required to be disclosed are details that are really not relevant to the actual property. A dispute with your neighbour over a low hanging tree three years ago that has now been resolved or a recent divorce that has lead you to sell are not things that legally need to be disclosed the buyers.
As too is sharing that your neighbours practice with their band in the garage all weekend every weekend, or that your road just happens to be the main thoroughfare for the local high school kids as they make their way to and from school each day. Information of this nature can be considered subjective and may not necessarily impact a person’s decision to buy. For all you know, the prospective buyer may also be in a band and wants to use their new garage to practice as well.
Real Estate Disclosure Laws - A State by State Breakdown
While vendor disclosure laws and requirements are fairly standard across Australia as outlined above, there are a few variances and points to note from a state by state perspective. What state or territory you are selling in can determine what information you need to disclose.
New South Wales
A Seller’s Disclosure Statement in NSW is not just one document outlining everything requiring disclosure. It’s a collection of documents referred to as Schedule 1 Prescribed Documents. These documents must be attached to the contract at the time of sale and consists of the following information:
- A Section 149 Certificate (also referred to a planning certificate) which includes full details about the property zoning
- Title documentation outlining whether the property is
- Subject to flooding
- Reserved for resumption
- Affected by the Coastal Protection Act 1979
- Located in a mine substance district
- Restricted in the development of the land due to possible landslip, subsidence, acid sulphate, bushfire and/or tidal inundation
- Restricted in the development of the land due to road widening
- Affected by any biobanking agreement
- Prone to bushfires
- Subject to a property vegetation plan under the Native Vegetation Act 2003
- A plan detailing the particulars of the lot - Location, size etc
- Full details of the services to the property and their locations
It’s fair to say Victorian laws require vendors to disclose a far greater amount of details about a property than any other state or territory.
In Victoria, a seller’s disclosure statement is referred to as a Section 32 Statement or simply a Vendor’s Statement. This detailed statement is required to be supplied to the buyer prior to the contracts being signed or exchanged and contains information and disclosures about the property.
A Section 32 Statement must be provided with every contract by law under the Sale of Land Act 1962. As well as these requirements there is a duty for the vendor to act honestly and reasonably in regard to property disclosure.
While some required details may not be specifically listed in the Section 32 Statement as required to be disclosed, the vendor is still obligated to provide all information that could affect the property under The Trade Practices Act.
On top of this, the relatively new Sale of Land Amendment Bill 2018 requires Victorian real estate agents to disclose whether the property was the site of a murder or if the property was used as a drug lab. Prior to this bill being introduced, the agent was only required to disclose this information if asked specifically by the buyer.
Queensland disclosure requirements are fairly lenient compared to other states. The legal requirement for vendors in Queensland is to include a ‘warning statement’ in the contract of sale (above the signature section) advising the buyer of the cooling-off period and recommending they seek professional legal advice and an independent property valuation.
Queensland sellers also have to supply a swimming pool fence compliance certificate (or notice stating that the pool may be non-compliant at the time of settlement), a sustainability declaration and details of tenancy agreements, if in place.
While most of the property information is included in the property advertising when selling, the onus is on the buyer to conduct their own due diligence to ascertain if the details are correct.
South Australian vendors have to supply a Form 1 Vendor’s Statement prior to settlement. The Form 1 Vendor’s Statement must be provided a minimum 10 days prior to settlement for a standard sale or 2 days prior to bidding if the property is sold at auction.
Western Australia, similar to Queensland, really only have to provide the basics of the property at the time of sale. This applies to standard properties. If the property is strata-titled, then further information needs to be provided, including a copy of the strata plan, the by-laws for the strata scheme and unit entitlements.
This information is often referred to by locals as the Seller’s Disclosure Statement and while it is often requested by buyers, it’s not a legal requirement to be supplied.
Australian Capital Territory
The Australian Capital Territory disclosure requirements are very comprehensive compared to other states and territories. The ACT Planning and Land Authority (ACTPLA) requires sellers to include almost a dozen documents alongside every sales contract.
In the Northern Territory, it’s a case of she’ll be right mate with no specific laws requiring a seller’s to provide a vendor’s statement or disclose any relevant details about the property.
Similar to the Northern Territory, there is no specific legislation requiring a Vendor’s Statement or Seller’s Disclosure Statement in Tasmania.
At What Point Should the Information Be Disclosed?
It’s not only important to know what information needs to be disclosed but also when. And, again, it all comes down to the state or territory in which you are selling your property.
Some states require the information to be provided within the advertising or as part of sale negotiations, some require a statement be provided prior to contracts being issued and other states will include the vendor’s statement as part of the contract.
Failing to disclose important information at the right time in accordance with state laws could have serious implications for yourself and for the sale of your property.
What Happens if I don’t Disclose Important Information?
Depending on what state or territory you are selling property in will depend on what laws are applicable to you and the information you disclose to the buyer. While you do want to get the best possible price for your property in a short time frame, you also don’t want to try to deliberately withhold information or deceive the buyer.
If you fail to disclose important or relevant property information in a State or Territory where it’s a legislated requirement then you and/or your agent will be subject to the consequences imposed by that state.
Failure to act in accordance with relevant disclosure laws could result in fines, penalties and even imprisonment. There is also a fair chance of the sale contract being nullified or giving the buyer the chance to withdraw from the contract.
Compensation may also be payable to the buyer if they are out of pocket or disadvantaged by the seller’s failure to disclose relevant information.
Where Can I Find More Information About Vendor’s Statements?
If you have any doubt about what should and shouldn’t be disclosed in your vendor statement you are best to speak to your agent and/or conveyancer who can go over the details and particulars applicable to your area.
Or simply give Sellable a call. We can make selling your home quick, easy and straight-forward. Especially if you need to sell in a hurry or have a property that is in need of repairs.