Property’s Sketchy Past
So what about a property’s sketchy past?
Are real estate agents required to reveal a property’s sketchy past – deaths, crimes and rumoured ghosts? Here’s what Queensland law says…
After a long search, you’ve finally found your dream home. It has everything you’ve been looking for: spacious bedrooms, plenty of natural light and a beautiful yard. Before you sign the contract, make sure you scratch beneath the surface. Is the property as good as it seems?
In Queensland, the doctrine of ‘caveat emptor’ (also known as ‘buyer beware’) applies. The buyer is responsible for thoroughly investigating the property themselves. In short, beware the Property’s Sketchy Past!
A building and pest inspection will check for faults and movement in the building as well as pests such as termites. An inspection of Council records search will reveal details of the improvements made on the property. There are other searches that may also be relevant to your property. That’s why hiring a highly qualified conveyancer is your best bet.
When your prospective home has a secret past
Often important pieces of information that might influence your decision to buy the property can’t be uncovered through a standard search. Perhaps someone committed suicide or was murdered in the house! Maybe the neighbour is a convicted sex offender or drug dealer. The local kids are convinced the house is haunted!
These types of properties are called “stigmatised properties”. The events that led them to become stigmatised are known as “material facts”. The law states that the real estate agent “must take reasonable steps to find out or verify the facts material to the sale, purchase, exchange or lease that a prudent real estate agent would have found out or verified to avoid error, omission, exaggeration or misrepresentation.”
The definition of a material fact and taking “reasonable steps” are both open to interpretation. The law is murky. To reduce confusion and protect buyers, the Real Estate Institute of Queensland (REIQ) believes that that the seller should have a positive obligation to disclose past events or crimes that may stigmatise the property. Until that happens, the law remains ambiguous.
Past cases fail to set a clear precedent
In 2006, a case in New South Wales (where material facts must also be disclosed) made news headlines. Two real estate agents failed to disclose to the buyer that a high-profile triple murder had been committed in the house. The real estate firm returned the buyer’s $80,000 deposit. The NSW Office of Fair Trading then fined the agents for engaging in misleading or deceptive conduct. This was the first time this type of penalty was handed out.
In the 2013 case of Charles Lloyd Property Group Pty Ltd v Buchanan, the land purchaser attempted to sue the vendor for failing to disclose a suicide that occurred on the land. The purchaser claimed they were misled and deceived by the seller’s pre-contractual silence about the suicide.
The judge found in favour of the vendor! Why? The the purchaser was aware of the suicide at the time that they requested an extension deed. The purchaser was trying to use the law! The land was to be subdivided and developed. As such, the circumstances didn’t give rise to a reasonable expectation that a suicide should be disclosed.
Let the buyer (still) beware
As the law stands, there is no positive obligation for the seller to disclose any past events or crimes that might influence a buyer’s decision to purchase a property.
The onus remains on the buyer to conduct all relevant searches and take it one step further if they want to be certain that their property doesn’t have a sketchy history. By asking the seller, agent and neighbours about the property’s past and conducting some research online, the buyer could uncover skeletons in the closets they might not have otherwise known about.
If you have any further questions about your rights and obligations when you’re buying or selling property, contact our team of experienced conveyancers.