Understanding Seller's Disclosure Obligations in Real Estate Transactions

Reviewed by Christina Penrose

Tapping into the world of property buying and selling can indeed feel like a maze, particularly when it comes to understanding the intricacies of 'non-disclosure agreements'. A non-disclosure agreement outlines what sellers must inform buyers about the property, covering aspects that could potentially cause problems if not transparently communicated. 

Whether you are a buyer or seller, the key to a successful and stress-free property transaction lies in due diligence and transparency in all dealings. 

A Deep Dive with an Expert

Recently, we had the opportunity to sit down with Kayleigh Swift, Director of Property at NB Lawyers in Brisbane, to gain insights into the complexities of non-disclosures.

The Importance of Disclosing Material Facts

As a seller, you have an obligation to disclose significant details in your property discussions. Kayleigh explained that potential issues can arise if material facts are not disclosed to the buyer. "Material facts are those major details that could influence your decision about the purchase," says Kayleigh. She noted that it is crucial that sellers are upfront about their property's condition and legal standing. 

In Queensland, this is formalised through the Property Occupations Form 8, which allows an agent to disclose significant items to a buyer.

Legal Insights

"The Property Occupations Act 2014 (Qld) does not necessitate an agent to inform a prospective buyer who is selling a property on behalf of a family member or an employee of the agency; however, failure to do so may be viewed as misleading and deceptive," outlined Kayleigh. Under the Australian Consumer Law (Section 18), engaging in misleading or deceptive conduct is prohibited, highlighting the importance of disclosure.

What Must Sellers Disclose?

Sellers are not mandated to disclose every trivial detail but must reveal material facts that could affect the buyer's decision. Not doing so amounts to non-disclosure despite the buyer's responsibility to conduct due diligence. Sellers are responsible for providing accurate and complete information to maintain transparency in the transaction.

Common Areas of Confusion

  • Past Crimes: Unlike in NSW, Queensland does not strictly require the disclosure of previous crimes, including murders, on a property. However, such events are considered material facts.
  • Termite Disclosure: Under the new Queensland Property Law Act, sellers will need to disclose known termites. The law was passed on 25 October 2023 but has not yet commenced.
  • Boundary Errors: A seller is currently not obligated to disclose errors in land boundaries; such issues need to be rectified before settlement.

Additional Legal Requirements

Depending on the property in question, sellers might have more disclosure obligations under various legislation, such as the Environmental Protection Act and the Electrical Safety Regulation. Kayleigh also touched on the implications of failing to disclose key facts, which can lead to transaction breakdowns and legal complications. The new Queensland Property Law Act aims to enhance the fairness and transparency of real estate transactions. This act will impose more rigorous disclosure obligations on sellers.

Transparency is Key for a Smooth Sale

If you are selling a property, you will need to sign the Property Occupations Form 8 to declare all material facts related to the property. To ensure a smooth transaction, it is important to accurately detail various elements such as neighbourhood disputes, safety switches, smoke alarms, pool safety, tenancies, and title encumbrances for a transparent and smooth sale process.

When it comes to buying or selling your home, having a real estate agent on your side is really helpful. With decades of experience in the real estate industry, the Penrose team can help you succeed in your property decision, protecting your transaction by ensuring transparency at every step. Get in touch today to take the stress out of your next big move in Brisbane.