16 Oct Buyer beware – Jeremy Streten
We ask a solicitor “What sellers have to tell you when buying a property”. Solicitor Jeremy Streten says buyer beware. Agents and sellers do not have to tell you as much as you might think or would like.
Transcript :
Kevin: Probably one of the most common questions I’m asked by a buyer is what exactly should an agent have to tell me or a seller have to disclose when they’re selling a property? Let’s find out. Jeremy Streten is a lawyer from SMSLaw.com.au. He joins me to talk about that.
Good day, Jeremy. How are you doing?
Jeremy: Very well, thanks.
Kevin: I imagine you get this question a lot, too: what things need to be disclosed. What do you say, Jeremy?
Jeremy: Yes, it’s an interesting question. The law says that it’s really buyer beware, so if you’re buying a property, you need to do your own investigations and find out everything you can about that property and not rely upon what anyone knows about that property, but that can be changed depending on what the actual issues are.
So, if there’s an issue that the seller knows would actually affect your ability to buy the property, then they have to disclose it to you. And if you ask the agent a question and they know the truth of what has actually happened with the property, then they have to tell them what that actual issue is.
Kevin: The difficulty, though, is proving it, isn’t it – proving what the seller knows and what the agent knows?
Jeremy: Absolutely, yes. The problem with a lot of the things with the law is actually proving what someone knew at the time. It depends on what it is and it depends on what you’re trying to actually prove.
Kevin: What are some of the substantial things that need to be disclosed that sellers need to be aware of?
Jeremy: Things like known defects in the property, so if you know that the construction isn’t up to scratch and that things aren’t properly approved, then you need to disclose that to the buyer.
There was a classic case in New South Wales where an Asian buyer was looking to buy a property and they weren’t told that someone had actually died in that property a couple of years beforehand, and that kind of information, because of who the buyers were and their religious beliefs, they weren’t actually able to buy.
It does vary on what it is, but there are…
Kevin: Can I ask you a question about that particular case, Jeremy? That raises a couple of really interesting points, in my mind anyway. Does that mean, then, that if the agent is aware of that, they need to disclose that to every buyer?
Jeremy: Things like that, yes, because that could affect everyone’s decision, in my view.
Kevin: That’s a big downer, really, isn’t it? That is going to greatly impact who’s going to buy it, so therefore, some people could see that as an opportunity to maybe screw the price right down.
Jeremy: They could, but unfortunately, if you think that it might affect someone’s ability to negotiate or to want to buy that property, then that is something that you need to disclose to them if you’re aware of it, because the mere fact that you’re asking yourself the question is indicative that it would be something that you should be disclosing.
Kevin: What about things like there was some white ant damage, we didn’t necessarily get the damage repaired, but we certainly got rid of the white ants? Is that something that also needs to be disclosed?
Jeremy: That’s an interesting one. Technically not, especially if the buyer has the right to get a pest inspection for the property, because their pest inspector or building inspector should find that information out. But if it’s substantial damage, then you definitely need to disclose it. If it’s minor damage and the inspector doesn’t pick it up, then you don’t have to disclose it.
It can also be that you don’t know that the damage is there, as well. I’ve seen cases where the owners didn’t actually know that the damage was there. Well, if they didn’t know it was there, then they couldn’t be held responsible for it.
Kevin: Just getting to the bottom line, I guess, now. What can a buyer do if they haven’t been told something substantial like that about the property? What can they do?
Jeremy: The big thing is if the contract hasn’t settled and they’re coming up with a settlement and they find out about it, then they could potentially terminate the contract depending on its terms. But if it has settled, then they can actually sue the seller for damages.
So, if the value of the property is less because of misrepresentation, if they have told them something or failed to tell them something about the property and you can prove there is a loss in value, then the buyer can actually sue the seller for that loss. That can be very difficult to prove, though.
Kevin: Yes, of course. Is there a timeframe on that?
Jeremy: The normal timeframe on a misrepresentation-type claim is about six years.
Kevin: But then, as you say, you have to prove that it was like that when you purchased it and you probably also have to prove that the seller knew about it, wouldn’t you?
Jeremy: Yes. You have to prove that the seller knew about it and also that it has actually diminished the value of the property. We all know that the value of a property does vary widely. You could ask ten different people and they probably have ten different answers for the value of a property and what might affect it, so the actual valuation question can be very difficult to understand and to really nail down.
Kevin: Yes, it raises an interesting question. We’re not going to be able to solve it here, but I still am a great believer in that a building and pest inspection – and even some other types of inspections – should be almost mandatory at the point of listing.
There are a couple of reasons for that, I think, Jeremy. One is that the seller is going to know that there’s nothing that’s going to hold up the sale of their property, but also, buyers are going to buy it with confidence, I would have thought.
Jeremy: Absolutely. I think probably one of the big things is that a building and pest inspection will have lots of caveats and lots of… If there was furniture up against a wall, then we wouldn’t have removed that.
You need to make sure that you get in behind all the walls, all the couches, all the beds, and make sure that what is behind the walls and what is behind the furniture doesn’t have any damage on it.
I had one recently where a client came to see me where behind the bed was a massive amount of termite damage that had been deliberately hidden away, and we were able to get some compensation from the seller on that.
Kevin: Yes, still a lot of gray areas here. If you want to get some good advice on this, go to SMSLaw.com.au. My guest has been Jeremy Streten. Jeremy, thanks for your time.
Jeremy: Thanks very much.
No Comments