Disclosure: What It Is and Why It Matters
In property, disclosure is the sharing of information between a vendor and buyer. When selling your property, there are certain things you must disclose. Non-disclosure may lead to the termination of your contract, a hefty fine, or even a lawsuit. It’s also important to be aware of disclosure as a buyer, to equip yourself with the information you need to make the right decision.
Disclosure law varies from state to state and can be quite confusing, which is why we’ll walk you through the whole process.
In the meantime, however, here’s what you need to know about disclosure.
What do I need to disclose as a seller?
Council approval on renovations
It’s the buyer’s responsibility to obtain proof of approval on any renovations you’ve done, and they may ask you for this. We also strongly recommend letting your buyer know if the works weren’t approved, to avoid them backing out of the contract if they find proof of disapproval.
Similarly, if you have a pool, make sure you have your pool compliance certificate handy to show that your installation is safe and compliant.
Easements and restrictions
In property law, an easement is a legal right to use another person’s property for a specific purpose and a particular amount of time. An example of this is a drainage easement. A drainage easement allows the water authority or local council to install or do stormwater drain works on your property. This may prevent you from doing certain things in this area of your property.
You should also let your buyer know if there are any rules, requirements, or restrictions on building a certain type of structure on your property, such as fencing or sheds.
Also, you need to disclose whether you’ve had any disputes with your neighbours about trees, fences, buildings, or other boundary issues. This will ensure that your buyer won’t be surprised if they find themselves in the same situation. Hiding information may get you a better price, but it comes at the risk of losing everything.
In NSW, you must disclose if your property is in a marked flood or bushfire-prone zone. Your contract must contain a zoning certificate from the council, which will include these types of disclosures.
Finally, material fact deals with disclosing any information that may turn a buyer off from purchasing your property. It’s one of the most confusing parts of disclosure as it’s hard to know what you really need to disclose.
Examples of material fact include crimes or deaths occurring at the property. Although there’s no legal requirement to disclose this information in NSW, it’s best to disclose anything that your buyer may find out about in the future through word of mouth or looking online. Again, failing to disclose certain information has led to broken contracts, fines, and expensive lawsuits in the past.
What disclosure questions should I ask as a buyer?
As mentioned, it’s also important to understand disclosure as a buyer. Unfortunately, the seller of a property and their estate agent may be hiding information to get a better price for the property.
This is where a conveyancer’s legal expertise and years of experience becomes essential. Still, there are also some key questions to keep front of mind during your property journey.
Has any work been done?
Ask for the council approval documents for any improvements or additions to the property. Unless the council issued an enforcement notice before you signed your contract, you’ll become responsible for any unapproved structures after the sale goes through. It’s also difficult to terminate a contract due to unapproved works as you’re expected to gain any information you need before signing.
We can help you add a special condition in your contract to allow you to carry out research and terminate the contract if you discover any unapproved works.
Does everything work?
One of the most important things we recommend doing before signing your contract is to carry out a building inspection. However, this inspection won’t cover everything, so it’s important to check things thoroughly during your viewing. Also, don’t be scared to ask any follow-up questions to ensure that you know about the working order of all appliances and fixtures.
Have you had any issues with the neighbours?
Are you planning on doing any building, gardening, or improvements? If so, it’ll be helpful to know if the seller has had any boundary disputes with neighbours in the past. Learning about any other neighbour issues, such as noise, may also influence your purchase decision.
Disclosure is an integral part of property law for both sellers and buyers. Knowing what to disclose as a seller and what questions to ask as a buyer will save you stress and stop you from making an expensive mistake.