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Property: Lawyers, agents and vendors beware

Property: Lawyers, agents and vendors beware

By Julie Barkla

Real Property 

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Changes to the Sale of Land Act which came into effect in March impose wider disclosure obligations.

From 1 March 2020 it became a contravention of s12(d) of the Sale of Land Act 1962 (Vic) for a vendor or their agent to knowingly conceal a material fact about a property, with the intention of inducing any person to purchase that property. Agents of a vendor include their solicitors, conveyancers and/or estate agents.

Victorian property lawyers, conveyancers and estate agents have voiced grave concerns about the potential application of this section, not least because its contravention carries a substantial financial penalty and up to 12 months imprisonment. These penalties apply to vendors, their solicitors, conveyancers, estate agents or any other agent who is found to have contravened s12(d).

Consumer Affairs Victoria (CAV) has released new guidelines designed to assist vendors of land and their agents to understand what a “material fact” is likely to be for the purposes of s12(d). The obvious problem is that it will be a court which will ultimately decide what is and is not a “material fact” for the purposes of s12(d), not CAV. 

The common law in Victoria already strongly suggests that psychologically impacted housing (eg, a house where a grisly murder has occurred) needs this fact disclosed to potential purchasers. While CAV guidelines which reinforced this obligation would have done little harm, the CAV guidelines, as published, create a significantly wider, while simultaneously more unclear, disclosure obligation.

Are vendors, solicitors, conveyancers and estate agents now required to disclose a broad range of additional factors (eg, development proposals in the “neighbourhood surrounding the property”) in case they might later be considered a “material fact”, on pain of 12 months in prison?

Is painting over cracks in preparation for a property’s sale “concealing a material fact” (or potential issues with the property’s stumping)?

Are estate agents, obliged under the Estate Agent (Professional Conduct) Regulations 2018 to “act fairly, honestly, in good faith and in the vendor’s best interests”, now obliged to act in the purchaser’s best interests? Isn’t that the role of the purchaser, their solicitors, advisers and agents?

What happened to the longstanding principle of caveat emptor, requiring a purchaser to undertake their own investigations, obtain their own advice and act in their own interests? 

The LIV consulted with CAV and requested that no guidelines be introduced before further consultations could be held with property lawyers, conveyancers and estate agents. The LIV’s written submission, “Sale of Land Amendment Act 2019 – Material Fact Guidelines” can be accessed via the LIV website.

Unfortunately, the CAV’s published guidelines do not appear to have had any regard to the concerns raised in the LIV submission. ■


Julie Barkla is a partner, Property Law and Mortgage Services at Wisewould Mahony Lawyers.

 


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