What do I have to disclose when selling a house?
The days of buyer beware are fading fast. States are introducing a growing list of regulations mandating what sellers must tell potential buyers – while Australian consumer law also protects purchasers across the country.
Here’s some good general areas to keep in mind when selling, but remember that disclosure regulations vary by state, so you should always get professional legal advice on your personal circumstances.
No matter which state or territory you live in, let’s take a look at some of the key things you have to disclose.
1. Pre-contractual disclosure obligations
Pre-contractual disclosure obligations relate to limitations, restraints or “defects” in the property title. These are mainly:
Easements give someone the right to use the land for a specific purpose, even if they’re not the land owner, such as an electrical or water easement for authorities, or a shared driveway.
Covenants are an obligation that require a property owner to abide by certain rules. An example could be a requirement that street landscaping or home-front finishes be maintained to an agreed finish and quality.
Leases are where a property remains under a rental agreement for a continued period after settlement.
2. Building consent
Made some renovations to your property? In some states you’ll need to provide the necessary documentation to show all works are up-to-date and approved. This also means you’ll have to disclose any building improvements that do not have full approval.
In Queensland, the onus is upon the buyer to conduct these checks to ensure they are satisfied, they do this through their local council and don't necessarily require information direct from the seller.
3. Property defects
Most states require a seller to disclose issues such as structural problems, damp, insect infestation or fixtures and appliances that don’t work, even if it’s a common practice for buyers to get building inspection reports before making an offer.
In Queensland, the seller does not have to disclose these issues as such however, if requested, do need to allow the buyer access to conduct their necessary checks.
4. Sensitive issues
Some states have imposed stricter requirements around declarations where a property has been the site of a murder, vicious crime or accident, as these may affect buyers’ perceptions of the property and, as a result, its value. A property previously used for illegal drug manufacturing also needs to be declared in most states, along with proof of the required rehabilitation to minimise any potential health impacts.
In Queensland, only copies of Applications or Orders in accordance with the Neighbourhood Disputes (Dividing Fences and Trees) Act must be disclosed to the buyer. Also, any work orders, notices or applications issued by a court, tribunal or authority that requires work to be done or money to be spent in relation tot he property, must be disclosed.
Newly introduced rules in Queensland requires both buyers and sellers to state their situation in relation to GST. The buyer must disclose if they are registered for GST and if they are acquiring the property for a 'creditable purpose'.
In addition, if the property being sold is a new residential premises or potential residential land, then the buyer most likely has to withhold a certain amount of money at settlement to remit to the ATO - the seller must disclose to the buyer if this is the case and determine how much when forming the contract.
What happens if something isn’t disclosed?
Honesty is always the best policy when it comes to disclosures, and not just for the sake of being ethical. At worst, you risk jail and fines in the tens of thousands, depending on which state or territory the property is in. At best, you could lose your buyer. In between, there are a range of penalties and fines that are just not worth the risk.
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The above information has been sourced from Realestate.com.au. To read the full article CLICK HERE.