Disclosure of Material Facts When Selling Real Estate in Victoria
When selling a property in Victoria, you may be aware of the term a ‘Vendor’s Statement’ under s 32 of the Sale of Land Act 1962 (Vic) (the Act). This is where a Vendor must give a signed statement that contains all matters and provisions under s 32 of the Act to the purchaser, prior to signing the contract of sale. Under s 32K of the Act, if an inadequate Vendor statement is provided, the purchaser can rescind the contract of sale.
As a vendor, it is also important to note the recent amendment to the Act. Section 12(d) of the act states that “any person, with the intention of inducing any person to buy any land makes or publishes any statement, promise or forecast which he knows to be misleading or deceptive or knowingly conceals any material facts or recklessly makes any statement or forecast which is misleading or deceptive is guilty of an offence.”
What is a Material Fact?
A material fact is any influential information that may sway a potential purchaser’s decision on whether or not to buy the land. Any fact or information that would be recognized as important in making a financial decision by a normal person will be considered a material fact.
Consumer Affairs has depicted two categories under which material facts can fall:
Generally: to which an average, reasonably informed purchaser would generally consider to be important to their decision whether to buy the property or not.
Specifically: a fact is known to be important to a specific purchaser which could arise if the purchaser were to ask a specific question about the land or inform the vendor or agent of their intended use of the land.
An Example of Material Facts
Some examples of material facts include:
- Building defects such as water leakages or pest infestations;
- Death or murder on the property;
- Construction without a permit;
- Flooding, fires, or any other natural disasters;
- History of violence on the property;
- Manufacturing of illegal substances;
- Large-scale building development is about to commence across the road.
When Must a Material Fact be Disclosed?
All material facts must be disclosed to the purchaser at the time of showing interest in purchasing the land. This may be done in various avenues such as before a public auction, in the vendor’s statement, or during the house inspections.
Consequences of Failure to Disclose Material Facts?
Any person concerning the sale of the land who makes or publishes any statement to which he knows to be misleading or conceals any material facts shall be guilty of an offence under s 12 of the Act and may be liable for an amount of up to $19,000 or equivalent to 120 penalty units or a period of imprisonment up to 12 months.
Circumstances Where the Vendor is Not Required to Give the Purchaser Another Section 32 Statement:
Under s 32O of the Act, if a contract of sale in respect of which a section 32 statement has been already provided and both the “vendor and purchaser enter into a subsequent in relation to the same land in substantially the same terms as the original contract, the vendor is not required, in respect of the subsequent contract, to give to the purchaser another 32 statement.”
Knowingly vs Fraudulently
The Sale of Land Amendment Act 2019 replaces the word “fraudulently” with “knowingly”. The word fraudulently prevalent in s 12(d) of the Act reflected the tort of deceit where a vendor is not generally required to advise a potential purchaser of any serious defects in the property, they cannot fraudulently conceal any defects. Additionally, a vendor may commit this tort of deceit if they are unable to answer questions honestly and completely about the structural soundness or quality of the property.
The change to this section now states that a
Elamine Lawyers Support:
Vendors must comply with all legal requirements when conducting a sale of land and disclose all relevant information in the Vendor’s statement. The failure to comply with these legal requirements may result in serious consequences as previously stated in this article.
At Elamine Lawyers we understand the complexities of making real estate decisions that align with your personal best interests and legal requirements. By seeking legal advice from us, we can ensure a timely and transparent outcome on your property matters and assist you with all aspects of this process.
Please contact the Elamine team on 03 8400 0100 if you require any more support in this process.
