CAVEAT EMPTOR, buyer beware…

It has long been known that a buyer of a property, in most circumstances, needs to make their own enquiries as to the quality of a property they are considering buying.  In most cases, the seller has no duty to disclose defects in that property or facts about its history, as macabre as they may be.

There are of course exceptions to this including:

•           unit owners must disclose to buyers all defects in the body corporate common property (usually this is the building structure) and any upcoming liabilities which are outside of the day to day running of a building;

•           if a buyer asks a question of the seller or their agent in relation to the property, the seller must not mislead the buyer by answering dishonestly.

I am often asked how much information needs to be disclosed to a buyer in the event a person dies in macabre or tragic circumstances in their home.  The general rule in Queensland, there is no legal duty to disclose stigmatization of a property to a buyer.

Complications can arise however due to the operation of the Trade Practices Act in Australia.  This law applies to Australian companies and its operation may pass an obligation to a seller (who is a company) or their real estate agent (who trades under a company structure) to disclose certain information about a property.  The Act states that a company must not engage in conduct which is misleading or deceptive.  So then, even if a company’s representative is silent on the point of a stigma relating to the property, the buyer may be able to make a claim against the seller for damages.

A case on point in NSW found in favour of the buyer who due to their Buddhist faith could not live in a property where a murder had occurred.  In this case the buyer had not settled their purchase and were permitted to rescind the Contract.

If a buyer settles a property and subsequently discovers its history, the remedy would be damages for the diminished value in the property – the property would of course have to be sold before those damages could be quantified.

Of course this is the legal perspective, any moral duty to disclose a stigma is something only a seller can decide.